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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 10-KSB

(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31,
2007

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 For the transition period from [ ] to [ ]

Commission file number 000-51163

Tornado Gold International
Corporation(Name of small business issuer in its charter)

|Delaware                                                             | 94-3409645                          
|-------------------------------------------------------------------- | ------------------------------------
|(State or other jurisdiction of incorporation or
      organization) | (I.R.S. Employer Identification No.)
|                                                                     |                                     
|                                                                     |                                     
|8600 Technology Way, Suite 118                                       |                                     
|Reno, Nevada                                                         | 89521                               
|(Address of principal executive offices)                             | (Zip Code)                          

Issuer's telephone number (775) 852-3770

Securities registered pursuant to Section 12(b) of the Act:

|Title of each class | Name of each exchange on which registered
|------------------- | -----------------------------------------
|Nil                 | Nil                                      

Securities registered pursuant to Section 12(g) of the Act:

Common Shares, par value $0.001(Title of
class)

Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.Yes [X] No [ ]

Check if there is no disclosure of delinquent filers in response
to Item 405 of Regulation S-B is not contained in this form, and no disclosure
will be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]

Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12-b-2 of the Exchange Act).Yes [ ] No [X]

State issuer's revenues for its most recent fiscal year$Nil

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State the aggregate market value of the voting and non-voting
common equity held by non-affiliates computed by reference to the price at which
the common equity was sold, or the average bid and asked prices of such common
equity, as of a specified date within 60 days. (See definition of affiliate in
Rule 12b-2 of the Exchange Act.)

Note: If determining whether a person is an affiliate will
involve an unreasonable effort and expense, the issuer may calculate the
aggregate market value of the common equity held by non-affiliates on the basis
of reasonable assumptions, if the assumptions are stated.

30,685,689 common shares @ $0.105(1)= $3,221,997(1)Closing prices
on April 10, 2008.

(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS)

Check whether the issuer has filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court. Yes [ ] No [ ]

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

State the number of shares outstanding of each of the issuer's
classes of equity stock, as of the latest practicable date.35,785,689
common shares issued and outstanding as of April 10, 2008

DOCUMENTS INCORPORATED BY REFERENCE

If the following documents are incorporated by reference,
briefly describe them and identify the part of the Form 10-KSB (e.g., Part I,
Part II, etc.) into which the document is incorporated: (1) any annual report to
security holders; (2) any proxy or information statement; and (3) any prospectus
filed pursuant to Rule 424(b) or (c) of the Securities Act of 1933 (Securities
Act). The listed documents should be clearly described for identification
purposes (e.g., annual report to security holders for fiscal year ended December
24, 1990).

Transitional Small Business Disclosure Format (Check one): Yes [
] No [X].

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PART I

|Item 1. | Description of Business.
|------- | ------------------------

This annual report contains forward-looking statements. These
statements relate to future events or our future financial performance. In some
cases, you can identify forward-looking statements by terminology such as may,
should,  expects, plans, anticipates, believes, estimates,
predicts, potential or continue or the negative of these terms or other
comparable terminology. These statements are only predictions and involve known
and unknown risks, uncertainties and other factors, including the risks in the
section entitled Risk Factors, that may cause our or our industrys actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements. Except as required by
applicable law, including the securities laws of the United States, we do not
intend to update any of the forward-looking statements to conform these
statements to actual results.

Our financial statements are stated in United States Dollars
(US$) and are prepared in accordance with United States Generally Accepted
Accounting Principles.

In this annual report, unless otherwise specified, all dollar
amounts are expressed in United States dollars and all references to common
shares refer to the common shares in our capital stock.

As used in this annual report, the terms we, us, our, and
Tornado mean Tornado Gold International Corporation, unless the context
clearly requires otherwise.

Corporate History and Business Overview

We were incorporated in Nevada as Nucotec, Inc. on October 8,
2001, in order to serve as a holding company for Saltys Warehouse, Inc. We
disposed of that asset in March 2004 as described herein and changed our name to
Tornado Gold International Corp. in July 2004. Our new management has undertaken
to change our business focus. Prior to March 2004, we operated through Saltys
Warehouse; under our new management, we are an exploration stage company that
has begun to acquire low-risk, high-grade properties for gold exploration in
Nevada. Using the evaluation technique described herein, we hope to acquire
properties that will offer new economically viable gold mining properties for
resale to entities who will undertake to begin mining operations on those
properties. We believe that our technical team, consisting of our new
management, will help us operate successfully. Earl W. Abbott, our officer and
director, has extensive data and program management experience; and Carl A.
Pescio, also one of our directors, has on-the-ground prospecting and property
knowledge. There is, however, no assurance that a commercially viable mineral
deposit exists on any of our properties. Further exploration will be required
before a final evaluation as to the economic and legal feasibility is
determined.

In particular, one of our former directors, Stanley B. Keith,
has developed what we believe to be a new and unique technological approach for
the exploration of certain types of gold deposits; we hope to use this approach
to identify suitable properties. Mr. Keiths approach has been developed over a
twenty-year period and has been applied to a large, world-wide database that
links specific geochemical signatures of certain types of gold deposits. Even
though Mr. Keith is no longer a director of our company, we believe we have
acquired sufficient knowledge in this technological approach to identify
suitable properties.

We believe that using this methodology can enable us to
eliminate properties that would turn out to contain lower-quality gold deposits.
Utilizing this geochemical screening methodology, we will seek to operate a
successful property-acquisition program that eliminates higher risk
properties.

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Our Current Business

From 2004 to 2006, we acquired a total of 16 properties
comprised of about 44,840 acres, all located in the North Central Nevada area,
in several transactions. These 16 properties included Jack Creek, Brock, Dry
Hills, Golconda, Goodwin Hill, HMD, Horseshoe Basin, Illipah, Marr, North Battle
Mountain, NT Green, South Lone Mountain, Stargo, Walti, West Whistler and Wilson
Peak. Under the various lease agreements we entered into respecting these
properties, we were obligated to make periodic lease payments to maintain our
interests in these properties. On September 24, 2007, we entered into a joint
venture agreement with Allied Nevada Gold Corp., a company created by Carl
Pescio and others to which Carl Pescio assigned all of his interests in 15
separate properties, relating to our joint venture with Allied Nevada Gold Corp.
The 15 properties covered by the joint venture agreement included Brock, Dry
Hills, Golconda, Goodwin Hill, HMD, Horseshoe Basin, Illipah, Marr, North Battle
Mountain, NT Green, South Lone Mountain, Stargo, Walti, West Whistler and Wilson
Peak.

Under the September 2007 joint venture agreement, we were
obliged to pay Allied Nevada Gold Crop. $975,000 on or before February 5, 2008.
We also agreed to pay $375,000 on or before June 30 of each year for annual
property payment on these 15 properties. We also agreed to incur certain minimum
amounts on field geologic activities during the earn-in period. This agreement
also provides that once we expended a total of $1,500,000 on any property, we
will have earned a 60% interest in that property.

Effective January 1, 2008, we entered into a new Exploration
and Option to Enter Operating Agreement with Allied Nevada Gold Corp., which
superseded the September 2007 joint venture agreement. The 2008 Exploration and
Option to Enter Operating Agreement limited the scope of joint ventures between
our company and Allied Nevada Gold Corp. to only two properties, namely the
Illipah property and the NT Green property.

Pursuant to the 2008 Exploration and Option to Enter Operating
Agreement, we paid to Allied Nevada Gold Corp. $100,000 on February 6, 2008 to
compensate them for federal annual mining claim maintenance fees, county
recording fees and other fees payable for the maintenance of the two properties.
Beginning on June 30, 2008 and on June 30 of each succeeding year during the
term of the agreement, we also agree to pay $70,000 to Allied Nevada Gold Corp.
for the purpose of compensating them for fees payable for the maintenance of
these two properties.

Under the 2008 Exploration and Option to Enter Operating
Agreement, we also agreed to certain annual expenditure obligations in
accordance with the following schedule:

Performance Date
    
    AnnualAmoun**t**On or before December 31, 2008
    $
    150,000On or before December 31, 2009
    $
    200,000On or before December 31, 2010
    $
    400,000On or before December 31 of each succeeding year
    $
    400,000


The 2008 Exploration and Option to Enter Operating Agreement
further provides that we have the option to earn and vest an undivided sixty
percent (60%) interest in a property and to form a joint venture for the
management and ownership of the property when the Company has incurred and paid
expenditures in the amount of $1,5000,000 on a particular property.

As a result of the 2008 Exploration and Option to Enter
Operating Agreement, we currently have mining claims in three (3) properties and
they are the Jack Creek property, the Illipah property and the NT Green
property.

After further exploration, our next phases of development will
be to advance these properties by identifying and prioritizing the drill
targets, evaluating the economic and legal feasibility of drilling those
targets, and then actually drilling those targets.

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Mining Claims. The properties we hold claims to are
described below:

Jack Creek Property- On October 3, 2005, we paid the
Bureau of Land Management $30,875 as consideration on the Exploration License
and Option to Lease Agreement entered into between the Company and Mr. Earl
Abbott, and Stanley Keith to explore 247 claims (nearly 5,000 acres) known as
the Jack Creek Property. Mr. Abbott is our president, chief executive officer,
and one of our directors, and Mr. Keith was a director of our company at that
time. In addition, on August 7, 2006, we acquired an option for 53 additional
claims at the Jack Creek Property. The option was acquired from Gateway Gold
(USA) Corp. through Messrs. Abbott and Keith.

Under the preliminary terms of this agreement, we were granted
a license to explore the property for a period of six-months to determine what
claims, if any, we wish to lease. The term of the license is for six-months, but
we have the option to extend.

If we lease all of the 247 claims, we will be required to make
the following advance lease payments:

Due Date
    
    AmountUpon signing
    $
    22,5001st anniversary
    $
    30,0002nd anniversary
    $
    37,5003rd anniversary
    $
    50,0004th anniversary
    $
    62,5005th anniversary and each anniversary
      thereafter
    $
    100,000


If any payments due from us to the Owners are not paid within
30 days of its due date, interest will be begin to accrue on the late payment at
a rate of 2% over the prime rate established by the Department of Business and
Industry of the State of Nevada.

Upon completion of a bankable feasibility study and payments
totaling $140,000, all subsequent payments will convert into advance minimum
royalty payments that are credited against the 4% production royalty due. A 1%
royalty is also due the owners on production on property consisting of a
two-mile circumference surrounding the leased property.

We will have the option to purchase one-half of the royalty
applicable to the property representing 2% of the net smelter returns. We will
also have the right to elect to purchase such part of the royalty in increments
representing 1% of the net smelter returns and the purchase price for each such
increment shall be $1,500,000. We will have the option to purchase one-half of
the area of interest royalty applicable to mineral rights, mining claims, and
properties which we acquire from third parties representing 0.5% of the Net
Smelter Returns. The purchase price for such part of the area of interest
royalty shall be $500,000 for the 0.5% of the area of interest royalty
applicable to mineral rights, mining claims, and properties which we acquire
from any third party.

We shall be responsible for all environmental liabilities and
reclamation costs we create and for indemnifying the Owners against any such
claims or obligations. We can terminate the lease at any time by giving 30 days
notice provided that there are no outstanding environmental or reclamation
liabilities and that all lease and production royalty payments are current.

The terms and obligations disclosed above are based upon
preliminary agreements of the parties still under review and may be subject to
change.

NTGreen Property- The NTGreen property is located in
central Lander County, Nevada, about 30 miles southwest of the town of Battle
Mountain. The property is connected with Battle Mountain via an interstate
highway, paved roads, good gravel roads, and finally a system of unimproved,
dirt roads. We held a total of 12 unpatented lode mining claims in the form of
an option agreement with the claimant, Carl A. Pescio, one of our directors. All
of the claims are recorded with the Lander County Recorder and filed with the
Bureau of Land Management (BLM). The property is subject to a 4% net smelter
royalty that may be bought down to a 2% net smelter royalty by the payment of
$1,500,000 per one percent. On September 24, 2007, we entered into a joint
venture agreement with

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Allied Nevada Gold Corp., a company created by Carl Pescio and
others to which Carl Pescio assigned all of his interests in, among other
things, the NTGreen property, relating to our joint venture with Allied Nevada
Gold Corp. Under this joint venture agreement, we were obliged to pay Allied
Nevada Gold Crop. $975,000 on or before February 5, 2008. Subsequently, we
entered into the 2008 Exploration and Option to Enter Operating Agreement
superseding the 2007 joint venture agreement with respect to the NT Green
property. This agreement provides that, among other things, once we expended a
total of $1,500,000 on this property, we will have earned a 60% interest in this
property.

Geological information relating to the NT Green property: upper
Paleozoic sedimentary rocks are exposed in an erosional window beneath Tertiary
volcanic rocks. The Paleozoic rocks exhibit the characteristics of gold-bearing
rocks. A fault structure does traverse onto the NTGreen property. Placer Dome
Mining Company is a former operator of the NTGreen property, but no data from
their exploration work is in our hands. Low levels of gold as well as associated
trace elements are documented from the property by limited surface sampling done
by Mr. Pescio.

The NTGreen property is undeveloped and no reserves or
resources are known. No mining or other mineral development is known to have
been performed on the property. Mr. Pescio did only limited work on the property
and no work has been done by us. We believe that there are indications that an
extensive gold system is present on the property that may have significant
economic potential, though there is no guarantee that this is the case. We plan
to conduct exploration work in the form of geological, geochemical, and
geophysical studies to develop drill targets. Drilling will investigate these
targets. Our management believes discovery of potentially economic gold values
will be followed by development of a reserve and, eventually, mining.

Illipah Prospect- On August 23, 2006, the company
entered into an agreement to acquire the Illipah prospect consisting of 191
unpatented mining claims located in White Pine County, Nevada in consideration
of $100,000 and 300,000 shares of its common stock. Under the terms of the
purchase agreement, $50,000 was paid and 50,000 shares of our common stock were
issued upon signing with an additional $50,000 paid and 100,000 shares of
restricted common stock issued on November 21, 2006. An additional 200,000
shares of restricted common stock have been issued as agreed to under the
agreement. Further, we assumed the sellers obligations in an underlying
exploration and mining lease agreement on the claims, and granted to the seller
a production royalty of two percent (2%) of net smelter returns on all rents and
mineral production from the property. We also agreed to pay $48,007 to the
United States Department of the Interior Bureau of Land Management for mining
claim maintenance fees, and be responsible for future annual maintenance and
filing fees on the acquired claims and any advanced minimum royalty payments due
to Carl Pescio, one of our directors, and Janet Pescio under an August 31, 2001,
agreement between the Pescios and the seller. On September 24, 2007, we entered
into a joint venture agreement with Allied Nevada Gold Corp., a company created
by Carl Pescio and others to which Carl Pescio assigned all of his interests in,
among other things, the NTGreen property, relating to our joint venture with
Allied Nevada Gold Corp. Under this joint venture agreement, we were obliged to
pay Allied Nevada Gold Crop. $975,000 on or before February 5, 2008.
Subsequently, we entered into the 2008 Exploration and Option to Enter Operating
Agreement superseding the 2007 joint venture agreement with respect to the NT
Green property. This agreement provides that, among other things, once we
expended a total of $1,500,000 on this property, we will have earned a 60%
interest in this property.

The Illipah prospect is situation in eastern Nevada at the
southern extension of the Carlin Trend. The property consists of one hundred
ninety one unpatented federal Bureau of Land Management lode mining claims,
approximately 3,820 acres.

All of the properties held are located in the state of Nevada.
We have recently commenced our exploration of these properties and have yet to
determine whether any of our properties are commercially viable. In order for us
to complete this analysis, additional funding is required.

Intellectual Property.

We use the trade name Tornado Gold International Corp. We also
own the domain name and content of our website, located at www.tornadogold.com.
Our website costs $17 per month, though occasionally higher costs are incurred
when we add information to our website. We depend on our managements expertise
in assessing potential property acquisitions, and as such, our business depends
on that proprietary information.

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Competition.

In the United States, there are numerous mining and exploration
companies, both big and small. All of these mining companies are seeking
properties of merit and funds. We will have to compete against such companies to
acquire the funds to develop our mineral claims. The availability of funds for
exploration is sometimes limited, and we may find it difficult to compete with
larger and more well-known companies for capital. Even though we have the right
to the minerals on our claims, there is no guarantee we will be able to raise
sufficient funds in the future to maintain our mineral claims in good standing.
Therefore, if we do not have sufficient funds for exploration, our claims might
lapse and be staked by other mining interests. We might be forced to seek a
joint venture partner to assist in the exploration of our mineral claims. In
this case, there is the possibility that we might not be able to pay our
proportionate share of the exploration costs and might be diluted to an
insignificant carried interest.

Even when a commercial viable ore body is discovered, there is
no guarantee competition in refining the ore will not exist. Other companies may
have long-term contracts with refining companies, thereby inhibiting our ability
to process our ore and eventually market it. At this point in time, we do not
have any contractual agreements to refine any potential ore we might discover on
our mineral claims.

The exploration business is highly competitive and highly
fragmented, dominated by both large and small mining companies. Success will
largely depend on our ability to attract talent from the mining field and our
ability to fund our operations. There is no assurance that our mineral expansion
plans will be realized.

Government Regulation.

We are committed to complying, and, to our knowledge, are in
compliance, with all governmental and environmental regulations. Permits from a
variety of regulatory authorities are required for many aspects of mine
operation and reclamation. We cannot predict the extent to which future
legislation and regulation could cause additional expense, capital expenditures,
restrictions, and delays in the exploration of our properties.

Our activities are not only subject to extensive federal,
state, and local regulations controlling the mining of, and exploration for,
mineral properties, but also the possible effects of such activities upon the
environment. Future legislation and regulations could cause additional expense,
capital expenditures, restrictions, and delays in the exploration of our
properties, the extent of which cannot be predicted. Permits may also be
required from a variety of regulatory authorities for many aspects of mine
operation and reclamation. In the context of environmental permitting, including
the approval of reclamation plans, we must comply with known standards, existing
laws, and regulations that may entail greater or lesser costs and delays
depending on the nature of the activity to be permitted and how stringently the
regulations are implemented by the permitting authority. We are not presently
aware of any specific material environmental constraint affecting our properties
that would preclude the economic development or operation of any specific
property.

It is reasonable to expect that compliance with environmental
regulations will increase our costs. Such compliance may include feasibility
studies on the surface impact of our proposed exploration operations; costs
associated with minimizing surface impact; water treatment and protection;
reclamation activities, including rehabilitation of various sites; on-going
efforts at alleviating the mining impact on wildlife; and permits or bonds as
may be required to ensure our compliance with applicable regulations. It is
possible that the costs and delays associated with such compliance could become
so prohibitive that we may decide not to proceed with exploration on any of our
mineral properties.

We are prepared to engage professionals, if necessary, to
ensure regulatory compliance, but in the near term we expect our activities to
require minimal regulatory oversight. If we expand the scope of our activities
in the future, it is reasonable to expect expenditures on compliance to
rise.

Research and Development.

We are not currently conducting any research and development
activities, nor have we during the last two fiscal years, other than property
explorations and assessments.

Employees.

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We do not have any employees. We pay our officers, Dr. Abbott
and Mr. Drazenovic, consulting fees. We are not a party to any collective
bargaining agreements. We do not compensate our directors as employees, but we
have agreements with them to issue stock options for their services as our
directors. We pay our officers and directors for their mining exploration and
administrative services to us as consultants, not as employees, and we also have
an assistant who is being paid through a staffing agency.

Facilities.

As of February 11, 2008, our executive, administrative and
operating offices were located at 8600 Technology Way, Suite 118, Reno, Nevada,
89521.

RISK FACTORS

Much of the information included in this quarterly report
includes or is based upon estimates, projections or other forward-looking
statements. Such forward-looking statements include any projections or
estimates made by us and our management in connection with our business
operations. While these forward-looking statements, and any assumptions upon
which they are based, are made in good faith and reflect our current judgment
regarding the direction of our business, actual results will almost always vary,
sometimes materially, from any estimates, predictions, projections, assumptions,
or other future performance suggested herein. We undertake no obligation to
update forward-looking statements to reflect events or circumstances occurring
after the date of such statements.

Such estimates, projections or other forward-looking
statements involve various risks and uncertainties as outlined below. We
caution readers of this quarterly report that important factors in some cases
have affected and, in the future, could materially affect actual results and
cause actual results to differ materially from the results expressed in any such
estimates, projections or other forward-looking statements. In evaluating us,
our business and any investment in our business, readers should carefully
consider the following factors.

Our new business operations will be subject to a number of
risks and uncertainties, including those set forth below:

Risks Related to Our Company and Our Business

There is no assurance that we will operate profitably or
will generate positive cash flow in the future.

We have never generated any revenues from operations. We do not
presently have sufficient financial resources or any operating cash flow to
undertake by ourselves all of our planned exploration and development programs.
If we cannot generate positive cash flows in the future, or raise sufficient
financing to continue our normal operations, then we may be forced to scale down
or even close our operations. Furthermore, our ability to meet our business plan
could be adversely affected.

We will depend almost exclusively on outside capital to pay for
the continued exploration and development of our properties. Such outside
capital may include the sale of additional stock and/or commercial borrowing.
Capital may not be available to meet our continuing exploration and development
costs or, if the capital is available, it may not be on terms acceptable to us.
The issuance of additional equity securities by us would result in a significant
dilution in the equity interests of our then-current stockholders. Obtaining
commercial loans, assuming those loans would be available, will increase our
liabilities and future cash commitments.

If we are unable to obtain financing in the amounts and on
terms deemed acceptable to us, we may be unable to continue our business, and as
a result, we may be required to scale back or cease operations for our business,
the result of which would be that our stockholders would lose some or all of
their investment.

We have a limited operating history, and if we are not
successful in continuing to grow our business, we may have to scale back or even
cease our ongoing business operations.

Our company has a limited operating history and must be
considered in the exploration stage. Our operations will be subject to all the
risks inherent in the establishment of a developing enterprise and the
uncertainties arising from the absence of a significant operating history. We
may be unable to operate on a profitable basis. We are in the

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exploration stage and potential investors should be aware of
the difficulties normally encountered by enterprises in the exploration stage.
If our business plan is not successful, and we are not able to operate
profitably, investors may lose some or all of their investment in our
company.

There are numerous exploration and development risks
associated with our industry.

There is no assurance given by us that our exploration and
development programs and properties will result in the discovery, development,
or production of a commercially viable ore body.

The business of exploration for minerals and mining involves a
high degree of risk. Few properties that are explored are ultimately developed
into producing mines. There is no assurance that our mineral exploration and
development activities will result in any discoveries of bodies of commercial
ore. The economics of developing gold and other mineral properties are affected
by many factors, including capital and operating costs, variations of the grade
of ore mined, fluctuating mineral markets, costs of processing equipment, and
such other factors as government regulations, including regulations relating to
royalties, allowable production, importing and exporting of minerals, and
environmental protection. Substantial expenditures are required to establish
reserves through drilling, to develop metallurgical processes to extract metal
from ore, and to develop the mining and processing facilities and infrastructure
at any site chosen for mining. No assurance can be given that funds required for
development can be obtained on a timely basis. The marketability of any minerals
acquired or discovered may be affected by numerous factors which are beyond our
control and which cannot be accurately foreseen or predicted, such as market
fluctuations, the global marketing conditions for precious and base metals, the
proximity and capacity of milling facilities, mineral markets, and processing
equipment, and such other factors as government regulations, including
regulations relating to royalties, allowable production, importing and exporting
minerals, and environmental protection.

The price of gold can be volatile.

Gold prices historically have fluctuated widely and are
affected by numerous factors outside of our control, including industrial and
retail demand, central bank lending, sales and purchases of gold, forward sales
of gold by producers and speculators, levels of gold production, short-term
changes in supply and demand because of speculative hedging activities,
confidence in the global monetary system, expectations of the future rate of
inflation, the strength of the US dollar (the currency in which the price of
gold is generally quoted), interest rates, and global or regional political or
economic events.

The potential profitability of our operations is directly
related to the market price of gold. A decline in the market price of gold would
materially and adversely affect our financial position. A decline in the market
price of gold may also require us to write-down any mineral reserves that we
might book, which would have a material and adverse effect on our earnings and
financial position. Further, if the market price of gold declines, we may
experience liquidity difficulties if and when we attempt to sell any gold we
discover. This may reduce our ability to invest in exploration and development,
which would materially and adversely affect future production, earnings, and our
financial position.

Competition in the gold mining industry is highly
competitive and there is no assurance that we will be successful in acquiring
leases.

The gold mining industry is intensely competitive. We compete
with numerous individuals and companies, including many major gold exploration
and mining companies, that have substantially greater technical, financial, and
operational resources and staffs. Accordingly, there is a high degree of
competition for desirable mining leases, suitable properties for mining
operations, and necessary mining equipment, as well as for access to funds. We
cannot predict if the necessary funds can be raised or that any projected work
will be completed. There are other competitors that have operations in the
Nevada area and the presence of these competitors could adversely affect our
ability to acquire additional leases.

Government regulation and environmental regulatory
requirements may impact our operations.

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Failure to comply with applicable environmental laws,
regulations, and permitting requirements may result in enforcement actions
thereunder, including orders issued by regulatory or judicial authorities,
causing operations to cease or be curtailed, and may include corrective measures
requiring capital expenditures, installation of additional equipment, or
remedial actions. Parties engaged in mining operations may be required to
compensate those suffering loss or damage by reason of the mining activities and
may have civil or criminal fines or penalties imposed for violations of
applicable laws or regulations.

Amendments to current laws, regulations, and permits governing
operations and activities of mining companies, or more stringent implementation
thereof, could have a material adverse impact on us and cause increases in
capital expenditures or production costs or reduction in levels of production at
producing properties or require abandonment or delays in development of new
mining properties.

To the best of our knowledge, we are operating in compliance
with all applicable environmental regulations.

Adversarial legal proceedings may adversely affect
us.

We may become party to litigation or other adversary
proceedings, with or without merit, in a number of jurisdictions. The cost of
defending such claims may take away from management time and effort and if
determined adversely to us, may have a material and adverse effect on our cash
flows, results of operation, and financial condition. As at the date of this
Registration Statement, we are not a party to any material litigation or other
adversary proceeding.

Our directors and/or officers may have conflicts of
interest.

There is no assurance given by us that our directors and
officers will not have conflicts of interest from time to time.

Our directors and officers have entered into, and may continue
to enter into, numerous mining leases and options with us, which may not have
been, or may not be, at arms-length.

Furthermore, our directors and officers may serve as directors
or officers of other public resource companies or have significant shareholdings
in other public resource companies and, to the extent that such other companies
may participate in ventures in which we may participate, our directors may have
a conflict of interest in negotiating and concluding terms respecting the extent
of such participation. The interests of these companies may differ from time to
time. In the event that such a conflict of interest arises at a meeting of our
directors, a director who has such a conflict will abstain from voting for or
against any resolution involving any such conflict.

We may be subject to uninsured risks.

There is no assurance given by us that we are adequately
insured against all risks.

We may become subject to liability for cave-ins, pollution, or
other hazards against which we cannot insure or against which we have elected
not to insure because of high premium costs or other reasons. The payment of
such liabilities would reduce the funds available for exploration and mining
activities.

Our Bylaws contain provisions indemnifying our officers
and directors against all costs, charges, and expenses incurred by
them.

Our Bylaws contain provisions with respect to the
indemnification of our officers and directors against all costs, charges, and
expenses, including an amount paid to settle an action or satisfy a judgment,
actually and reasonably incurred by him, in a civil, criminal, or administrative
action or proceeding, to which he is made a party by reason of his being or
having been one of our directors or officers.

Our Bylaws do not contain anti-takeover provisions, which
could result in a change of our management and directors if there is a take-over
of us.

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- 11 -

We do not currently have a stockholder rights plan or any
anti-takeover provisions in our Bylaws. Without any anti-takeover provisions,
there is no deterrent for a take-over of us, which may result in a change in our
management and directors.

Risks Related to Our Securities

A decline in the price of our common stock could affect
our ability to raise further working capital and adversely impact our
operations.

A prolonged decline in the price of our common stock could
result in a reduction in the liquidity of our common stock and a reduction in
our ability to raise capital. Because our operations have been primarily
financed through the sale of convertible debt and equity securities, a decline
in the price of our common stock could be especially detrimental to our
liquidity and our continued operations. Any reduction in our ability to raise
equity capital in the future would force us to reallocate funds from other
planned uses and would have a significant negative effect on our business plans
and operations, including our ability to develop new projects and continue our
current operations. If our stock price declines, we may not be able to raise
additional capital or generate funds from operations sufficient to meet our
obligations.

Trading of our stock may be restricted by the SECs
Penny Stock regulations, which may limit a stockholders ability to buy and
sell our stock.

The U.S. Securities and Exchange Commission has adopted
regulations which generally define penny stock to be any equity security that
has a market price (as defined) less than $5.00 per share or an exercise price
of less than $5.00 per share, subject to certain exceptions. Our securities are
covered by the penny stock rules, which impose additional sales practice
requirements on broker-dealers who sell to persons other than established
customers and accredited investors. The term accredited investor refers
generally to institutions with assets in excess of $5,000,000 or individuals
with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or
$300,000 jointly with their spouse. The penny stock rules require a
broker-dealer, prior to a transaction in a penny stock not otherwise exempt from
the rules, to deliver a standardized risk disclosure document in a form prepared
by the SEC, which provides information about penny stocks and the nature and
level of risks in the penny stock market. The broker-dealer also must provide
the customer with current bid and offer quotations for the penny stock, the
compensation of the broker-dealer and its salesperson in the transaction, and
monthly account statements showing the market value of each penny stock held in
the customers account. The bid and offer quotations, and the broker-dealer and
salesperson compensation information, must be given to the customer orally or in
writing prior to effecting the transaction and must be given to the customer in
writing before or with the customers confirmation. In addition, the penny stock
rules require that prior to a transaction in a penny stock not otherwise exempt
from these rules, the broker-dealer must make a special written determination
that the penny stock is a suitable investment for the purchaser and receive the
purchasers written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary
market for the stock that is subject to these penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our
securities. We believe that the penny stock rules discourage investor interest
in, and limit the marketability of, our common stock.

NASD sales practice requirements may also limit a
stockholders ability to buy and sell our stock.

In addition to the penny stock rules described above, the
NASD has adopted rules that require that in recommending an investment to a
customer, a broker-dealer must have reasonable grounds for believing that the
investment is suitable for that customer. Prior to recommending speculative
low-priced securities to their non-institutional customers, broker-dealers must
make reasonable efforts to obtain information about the customers financial
status, tax status, investment objectives, and other information. Under
interpretations of these rules, the NASD believes that there is a high
probability that speculative low-priced securities will not be suitable for at
least some customers. The NASD requirements make it more difficult for
broker-dealers to recommend that their customers buy our common stock, which may
limit your ability to buy and sell our stock and have an adverse effect on the
market for our shares.

Trading in our common shares on the OTC Bulletin Board is
limited and sporadic, making it difficult for our

---

- 12 -

stockholders to sell their shares or liquidate their
investments.

Our common shares are currently quoted on the OTC Bulletin
Board. The trading price of our common shares has been subject to wide
fluctuations. The market price of a publicly traded stock, especially a junior
resource issuer like us, is affected by many variables in addition to those
directly related to exploration successes or failures. Such factors include the
general condition of the market for junior resource stocks, the strength of the
economy generally, the availability and attractiveness of alternative
investments, and the breadth of the public market for the stock. The effect of
these and other factors on the market price of the common shares on the OTC
Bulletin Board suggests that our shares will continue to be volatile. The stock
market has generally experienced extreme price and volume fluctuations that have
often been unrelated or disproportionate to the operating performance of
companies with no current business operation. There can be no assurance that
trading prices and price earnings ratios previously experienced by our common
shares will be matched or maintained. These broad market and industry factors
may adversely affect the market price of our common shares, regardless of our
operating performance. Therefore, investors could suffer significant losses if
our shares are depressed or illiquid when an investor seeks liquidity and needs
to sell our shares.

In the past, following periods of volatility in the market
price of a companys securities, securities class-action litigation has often
been instituted. Such litigation, if instituted, could result in substantial
costs for us and a diversion of managements attention and resources.

Because of the early stage of development and the nature
of our business, our securities are considered highly speculative.

Our securities must be considered highly speculative, generally
because of the nature of our business and the early stage of its development. We
are engaged in the business of mining. Our properties are in the exploration
stage only and are without known gold reserves. Accordingly, we have not
generated any revenues nor have we realized a profit from our operations to date
and there is little likelihood that we will generate any revenues or realize any
profits in the short term. Any profitability in the future from our business
will be dependent upon locating and developing gold, which itself is subject to
numerous risk factors as set forth herein. Since we have not generated any
revenues, we will have to raise additional monies through the sale of our equity
securities or debt in order to continue our business operations.

Investors interests in our company will be diluted and
investors may suffer dilution in their net book value per share if we issue
additional shares or raise funds through the sale of equity
securities.

In the event that we are required to issue any additional
shares or enter into private placements to raise financing through the sale of
equity securities, investors interests in us will be diluted and investors may
suffer dilution in their net book value per share, depending on the price at
which such securities are sold. If we issue any such additional shares, such
issuances also will cause a reduction in the proportionate ownership and voting
power of all other stockholders. Further, any such issuance may result in a
change in our control.

|Item 2. | Description of Property.
|------- | ------------------------

Property held by us: As of the date of this annual report on
Form 10-KSB, we hold the following properties: Jack Creek Property, NTGreen
Property and Illipah Prospect. For detail descriptions of these properties,
please see the section entitled Business above.

Our facilities: As of the date of this annual report on Form
10-KSB, our executive, administrative, and operating offices were located at
8600 Technology Way, Suite 118, Reno, Nevada, 89521. Our office is leased in
six-month terms that automatically renew, at a cost of $1,395 per month, and
consists of office space that is approximately 258 square feet. We believe these
facilities are adequate for our current needs and that alternate facilities on
similar terms would be readily available if needed.

|Item 3. | Legal Proceedings.
|------- | ------------------

We know of no material, active or pending legal proceedings
against our company, nor are we involved as a plaintiff

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- 13 -

in any material proceeding or pending litigation. There are no
proceedings in which any of our directors, officers or affiliates, or any
registered or beneficial shareholder, is an adverse party or has a material
interest adverse to our interest.

|Item 4. | Submissions of Matters to a Vote of Security
      Holders.
|------- | -----------------------------------------------------------

None

PART II

|Item 5. | Market for Common Equity and Related
      Stockholder Matters.
|------- | ---------------------------------------------------------------

Our common stock is quoted on the OTC Bulletin Board and in the
Pink Sheets under the trading symbol TOGI. The Company completed a 50-for-1
forward stock split of its issued and outstanding shares of common stock on
April 27, 2004; a 6.82 -for-1 forward stock split on August 31, 2004; and a 1.20
-for-1 forward stock split on May 31, 2005.

The following table sets forth the high and low bid prices for
our common stock for the periods indicated, as reported by Pink Sheets, LLC.
These quotations reflect inter-dealer prices, without retail mark-up, mark-down,
or commission, and may not represent actual transactions.

|                                                                                   |   | Closing Bid | 
|---------------------------------------------------------------------------------- | - | ----------- | 
|                                                                                   |   | High        | 
|Fiscal Year 2005:                                                                  |   |             | 
|Quarter Ended March 31, 2005                                                       | $ | 1.01        | 
|Quarter Ended June 30, 2005 (before 20%
      stock dividend through May 24, 2005) | $ | 1.06        | 
|Quarter Ended June 30, 2005 (after 20%
      stock dividend from May 25, 2005)     | $ | 0.53        | 
|Quarter Ended September 30, 2005                                                   | $ | 0.81        | 
|Quarter Ended December 31, 2005                                                    | $ | 0.84        | 
|Fiscal Year 2006:                                                                  |   |             | 
|Quarter Ended March 31, 2006                                                       | $ | 0.915       | 
|Quarter Ended June 30, 2006                                                        | $ | 1.04        | 
|Quarter Ended September 30, 2006                                                   | $ | 0.85        | 
|Quarter Ended December 31, 2006                                                    | $ | 0.45        | 
|Fiscal Year 2007                                                                   |   |             | 
|Quarter Ended March 31, 2007                                                       | $ | 0.60        | 
|Quarter Ended June 30, 2007                                                        | $ | 0.49        | 
|Quarter Ended September 30, 2007                                                   | $ | 0.30        | 
|Quarter Ended December 31, 2007                                                    | $ | 0.20        | 

As of April 10, 2008, there were approximately 39 holders of
record of our common stock.

Options. We have a total of 210,000 exercisable options
to purchase shares of our common stock currently outstanding, of which 60,000
were granted in 2004 and 150,000 were granted in 2005. We have 150,000 options
outstanding to purchase shares of our common stock at $0.75 per share to a
consultant pursuant to a consulting service agreement. Of these 150,000 options,
25,000 options were granted in September 2005 and 125,000 options were granted
in December 2005; these 150,000 options expire September 28, 2010. We also
granted 60,000 options to purchase shares of our common stock at $0.15 per
shares to former employees of the company. In June 2006, former management
exercised some of their options to purchase a total of 24,800 shares of the our
common stock for $3,720. The remaining options expire in March 2014.

Warrants. We have 625,000 warrants outstanding to
purchase shares of our common stock at $0.85 per share. These warrants expire in
December 2010. As the result of our July 18, 2006 private placement, we have an
aggregate of

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- 14 -

6,145,000 additional warrants to purchase our common stock at
  $0.60 per share. These warrants expire in July 2009. We also have outstanding
  5,000,000 special warrants with each special warrant (Special Warrant)
  entitling the holder thereof to acquire one share of common stock without additional
  consideration. The holder of Special Warrants, in its discretion, may convert
  one Special Warrant into one share of common stock at any time not later than
  10 years from the closing without the tender of any additional consideration.
  However, the Special Warrants have no voting rights. The Special Warrants shall
  not be exercisable if, after giving effect to any such purported exercise, the
  holder, together with any affiliate thereof (including any person or company
  acting jointly or in concert with the holder) (the Joint Actors)
  would in the aggregate beneficially own, or exercise control or direction over,
  that number of our voting securities that is 9.99% or greater of the total of
  our issued and outstanding voting securities, immediately after giving effect
  to such exercise; provided, however, that upon the holder providing our company
  with sixty-one (61) days notice that such holder would like to waive this
  provision with regard to any or all shares of common stock issuable upon exercise
  of the warrants, this provision will be of no force or effect with regard to
  all or a portion of the warrants referenced in the Waiver Notice.

Dividend Policy

We have not paid any cash dividends on our common stock and
have no present intention of paying any dividends on the shares of our common
stock. Our current policy is to retain earnings, if any, for use in our
operations and in the development of our business. Our future dividend policy
will be determined from time to time by our board of directors.

Recent Sales of Unregistered Securities

On April 1, 2008, we issued 2,272,500 shares of our common
stock to one non-U.S. person (as that term is defined in Regulation S of the
Securities Act of 1933) pursuant to a release and settlement agreement we
entered into with the non-U.S. person to release our company from liquidated
damage provisions contained in a registration rights agreement we entered into
with the non-U.S. person for a previous private placement. We issued these
shares of our common stock in an offshore transaction relying on Regulation S
and/or Section 4(2) of the Securities Act of 1933.

On February 15, 2008, we issued 3,201,663 shares of our common
stock to two non-U.S. persons (as that term is defined in Regulation S of the
Securities Act of 1933) pursuant to conversions of convertible promissory notes
previously issued to these two non-U.S. persons. We issued these shares of our
common stock in offshore transactions relying on Regulation S and/or Section
4(2) of the Securities Act of 1933.

On October 9, 2007, we issued 200,000 shares of our common
stock to one accredited investor pursuant to an agreement we entered into with
the accredited investor to acquire rights to the Illipah prospect. We issued
these shares of our common stock in a private placement transaction exempt from
registration under the Securities Act of 1933, as amended, pursuant to Section
4(2) of the Securities Act of 1933 and/or Regulation D promulgated
thereunder.

On July 18, 2006, we sold an aggregate of approximately 6.15
million units of our securities to a limited number of accredited investors or
non-U.S. persons in a private placement. Unless otherwise stated, each unit
consisted of one share of common stock and one warrant to purchase one share of
common stock (Regular Warrant). The purchase price was $0.30 per unit, for an
aggregate amount of approximately $1.84 million. The Regular Warrants have an
exercise period of three years and an exercise price of $0.60 per share.
Included in the 6.15 million units are five million units consisting of five
million special warrants (Special Warrants) and an equivalent number of
Regular Warrants issued to one investor. Each Special Warrant converts into one
share of common stock not later than 10 years from the closing without the
tender of any additional consideration. The Special Warrants have no voting
rights. The securities sold by the us in this private placement were exempt from
registration under the Securities Act of 1933, as amended, pursuant to
Regulation S or Regulation D promulgated thereunder.

Equity Compensation Plan Information

We have not adopted any equity compensation plans.

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- 15 -

|Item 6. | Management Discussion and Analysis.
|------- | -----------------------------------

Overview

You should read the following discussion of our financial
condition and results of operations together with the audited financial
statements and the notes to audited financial statements included elsewhere in
this filing prepared in accordance with accounting principles generally accepted
in the United States. This discussion contains forward-looking statements that
reflect our plans, estimates and beliefs. Our actual results could differ
materially from those anticipated in these forward-looking statements.

Plan of Operations

In July 2006, we closed a financing of US $1,844,000. A substantial
  portion of the funds have been devoted to the lease costs of our properties.
  We also spent a material portion for administrative overhead and future acquisition
  opportunities. Thus, we have approximately, $3,500 available for exploration
  on its current properties and general and administrative expenses over the next
  12 months, during which period we will continue to pursue additional financing
  opportunities to further its exploration and acquisition program.

We begin our exploration process by attempting to understand
the regional geology of our prospects and by progressing through the
district-wide geologic setting. Eventually, we graduate to the geologic setting
of each individual proposed drill hole. Before drilling, we attempt to predict
our probability of success, and we will drill only sites that we believe have
the best chance of encountering a gold deposit. Typically, we will engage in
integrated surface geological, geochemical, and geophysical analysis before we
begin drilling. Some of the specific methods that we will engage in include
magmatic affinity, pluton vectoring, kinetic structural analysis, and metal
dispersion.

To date, we have acquired leases in several claim blocks in the
North Central Nevada area. However, in addition to our initial exploration
program, we will need to spend significant funds to complete further in-depth
drilling and engineering studies before we can identify whether or not we have a
commercially viable mineral deposit.

Future funding levels will also determine the extent and number
of properties that we will explore. No certainty can be ascertained on our
overall exploration program until significant funding levels have been achieved.

While most properties will be examined and sampled, we will
also analyze the results of all previous work that is publicly available for the
properties. We currently expect that in Spring 2009, we will perform a small
amount of drilling on the Jack Creek property. A ranking system will enable us
to decide which properties will undergo detailed work and drill at the earliest
opportunity. The remaining properties will be made available for farm-out or for
development at a later date, or dropped all-together from further work.

The following is a list of projects on which we have decided to
focus during the next 12 months. The prioritization of, and the projects
themselves, are expected to change depending on funding levels and preliminary
sampling results:

Jack Creek. We intend to undertake geological and
structural analysis, as well as soil sampling and geophysical surveys, on this
property, located in the Independence Mountains mining district about 50 miles
north of Elko, Nevada. If we are able to obtain additional financing, the
intended work is in preparation for an intended drill program on the property
currently expected to be performed in Spring 2008, which, in aggregate, is
expected to cost up to approximately $100,000.

The Jack Creek Property comprises a total of approximately
6,000 acres in Elko County, Nevada, and is located in the northern Independence
Mountains. Management believes that the property is attractive because it
occupies the southwest flank of a prominent gravity high, indicating the
presence of relatively shallow Paleozoic carbonate sedimentary rocks.

We acquired an option for 53 additional claims at the Jack
Creek Property, Elko County, Nevada. The option was acquired from Gateway Gold
(USA) Corp. through two of our directors, Earl Abbott and Stanley Keith. We have
the option to earn a 50% undivided interest in the 53 claims through our
expenditure on the claims of a total of $500,000

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- 16 -

in various stages by March 1, 2007, 2008, and 2009. Currently,
however, we do not have such funds available and will need to raise additional
funds in order to exercise the option.

NT Green. Subject to our ability to obtain further
financing, exploration is currently anticipated to occur during the Spring of
2009 and will focus on delineating drill targets. The property will be
prospected by sampling and analysis of mineralized rock. We expect to perform a
kinematic structural analysis of the property and expect to produce a more
realistic geologic map than those made available in the past. A soil
geochemistry program will aid in identifying favorable fault structures and
intersections, as well as the centers of the most active hydrothermal activity.
A pluton vectoring study is expected to be performed by analysis of all
intrusive rocks and their interpretation. In addition, an airborne magnetic
survey is expected to be performed over the property to aid in the discovery of
dikes and sills and to aid in the mapping and structural analysis. It is
intended that by the Spring of 2008, we will have identified targets for
permitting and drilling. We expect that it will cost up to approximately
$100,000 to complete this program; however, that amount may vary depending on
preliminary results.

Our forecast for our operations involves risks and
uncertainties, and actual results could fail as a result of a number of factors.
We will need to raise additional capital to exploit our properties. In the event
that we experience a shortfall in our capital, we intend to pursue capital
through public or private financing as well as borrowings and other sources. We
cannot guarantee that additional funding will be available on favorable terms,
if at all and if adequate funds are not available. Our ability to continue or
expand our operations may be significantly hindered. We have not contemplated
any plan of liquidation in the event that we do not generate revenues.

As an exploration company, we are not currently conducting any
research and development activities and we do not anticipate conducting such
activities in the near future. In the event that we obtain significant funding
to fully implement our exploration program, we will need to hire additional
employees or independent contractors and possibly purchase or lease additional
equipment. With large current demand for resource exploration equipment and
human capital in the state of Nevada, there is no guarantee that we will be able
to meet our equipment and human capital needs. However, management believes that
the network of relationships developed over the years by our officers and
directors in Nevada will largely mitigate any shortages that similar companies
face.

The projects described above will be managed by Dr. Earl
Abbott. Dr. Abbott holds a Ph.D degree in geology from Rice University where he
studied the tectonics of the western U.S. He has spent 34 years exploring for
mineral deposits, 26 of them for gold in Nevada, and, with Carl Pescio, he
managed an exploration program in Nevada in 1981 resulting in the acquisition of
3 gold ore bodies that were mined profitably. Over his career, Dr. Abbott has
consulted to the mining industry and has been an officer and director of several
junior mining companies. Dr. Abbott is a Certified Professional Geologist by the
American Institute of Professional Geologists (AIPG) and past President of the
Nevada Chapter. He is also a member and past President of the Geological Society
of Nevada (GSN), the Nevada Petroleum Society (NPS), and the Denver Region
Exploration Geologists Society (DREGS); and he is a member of the Society of
Economic Geologists (SEG), the Society for Mining, Metallurgy, and Exploration
(SME), the Geological Society of America (GSA), the Northwest Mining Association
(NWMA), the British Columbia & Yukon Chamber of Mines, and the Prospectors
and Developer Association of Canada (PDAC). Dr. Abbott is a Qualified Person
under the rules of National Instrument 43-101.

We expect to utilize the services of various third-party
geological professionals to assist with the various projects. The number of
consultants will depend on our initial exploratory results and funding levels.
No plans are in place for a significant change in the number of full-time
personnel.

Product Research and Development

We do not intend to conduct any research and development over
the twelve months ending December 31, 2008.

Purchase of Significant Equipment

We do not intend to purchase any significant equipment over the
twelve months ending December 31, 2008.

---

- 17 -

Result of Operations

For the year ended December 31, 2007, compared to the year
ended December 31, 2006

Revenue - We have realized no revenues for the year ended
December 31, 2007 and no revenues for the year ended December 31, 2006.

Operating Expenses - For the year ended December 31, 2007, our
total operating expenses were $2,170,629, compared to our total operating
expenses of $1,264,273 in the corresponding prior period. Of the $2,170,629
incurred in the year ended December 31, 2007, $167,957 related to our mining
exploration, $341,322 related to general and administrative activities, $Nil
related to our compensation expense on option grants and $1,661,350 resulted
from loss from abandonment of mining claims. Of the $1,264,273 incurred in the
year ended December 31, 2006, $705,286 related to mining exploration, $512,630
related to general and administrative activities, and $46,356 related to our
compensation expense on options grants. During the year period ended December
31, 2007, we accrued $249,975 in liquidated damages for breach of a registration
rights agreement and $94,375 in interest expenses on notes payable, compared to
interest accruing during the year ended December 31, 2006, of $81,326. No
interest has been paid on notes payable during either period. On

Of the $167,957 that we incurred in our mining operations during
  the year ended December 31, 2007, $61,819 relates to technical consulting services
  rendered by our President. Of the $341,322 that we incurred in general and administrative
  expenses during the year ended December 31, 2007, $38,685 relates to services
  rendered by our President. Of the $100,504 in total fees charged by our President,
  $53,344 was still owed to him at December 31, 2007. Other notable general and
  administrative expenses incurred for the year ended December 31, 2007 include
  investor relations of $126,563, accounting fees of $27,530, legal fees of $70,542,
  and rent expense of $16,757.

| |                                    |   | For the Year Ended | 
| | ---------------------------------- | - | ------------------ | 
| |                                    |   | December 31,       | 
| |                                    |   | 2007               | 
| | Professional fees: Legal fees      | $ | 70,542             | 
| | Administrative Fee: E Abbott       |   | 38,685             | 
| | Investor Relations                 | $ | 126,563            | 
| | Professional fees: Accounting fees |   | 27,529             | 
| | Administrative Fee: G. Drazenovic  |   | Nil                | 
| | Insurance                          |   | 6,499              | 
| | Employee leasing                   |   | 6,987              | 
| | Travel                             |   | 26,167             | 
| | Advertising                        |   | Nil                | 
| | Rent                               |   | 16,757             | 
| | Consulting fees                    |   | Nil                | 
| | Stock Transfer Fees                |   | 3,797              | 
| | Depreciation                       |   | 3,397              | 
| | Telephone                          |   | 9,582              | 
| | Office expense                     |   | 4,405              | 
| | Dues and subscriptions             |   | 180                | 
| | Bank fees                          |   | 72                 | 
| | Taxes and licenses                 |   | 160                | 
| |                                    | $ | 341,322            | 

Off-Balance Sheet Arrangements.

There are no off balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital

---

- 18 -

expenditures or capital resources that are material to
investors; except for our commitment to lease certain mining property that
require us to make substantial lease payments in the future as disclosed in
Notes to the financial statements included elsewhere in this Proxy Statement.

Financial Condition, Liquidity and Capital Resources

We had cash and cash equivalents totaling $3,566 as of December
31, 2007, and had prepaid expenses totaling $14,008, making our total current
assets $17,574. We also had mining claims of $581,048, computer equipment of
$2,104, deferred offering costs of $2,500 and intangible assets of $4,578,
making our total assets $607,804 as of December 31, 2007. As of that date, our
available cash and cash equivalents were not sufficient to pay our day-today
expenditures or to effectuate our business plan. We are committed to continue to
seek the necessary financing needed to continue operating through the sale of
equity or debt financing, though there is no guarantee we will be able to do
so.

As of December 31, 2007, we had a net working capital deficit
of $2,426,991.

Net cash used in operating activities was $764,685 for the year
ended December 31, 2007 compared to $1,144,404 for the year ended December 31,
2006.

Due to numerous economic and competitive risks, any or all of
which may have a material adverse impact upon our operations, there can be no
assurance that we will be able to generate significant revenues or achieve a
level of positive cash flow that would permit us to continue our current
business plan. Our current plans encompass the identification and acquisition of
properties exhibiting the potential for gold mining operations by others.
However, as noted, we must continue to raise additional capital in order to
ensure the availability of resources sufficient to fund all of our general and
administrative expenses for the next twelve months.

No assurances can be given that we will be able to obtain
sufficient operating capital through the sale of our common stock and borrowing
or that the development and implementation of our business plan will generate
sufficient revenues in the future to sustain ongoing operations. These factors
raise substantial doubt with our auditor about our ability to continue as a
going concern.

Going Concern

We have historically incurred losses and have incurred losses
of $2,514,979 for the year ended December 31, 2007. Because of these historical
losses, we will require additional working capital to develop our business
operations. We intend to raise additional working capital through private
placements, public offerings, bank financing and/or advances from related
parties or shareholder loans.

The continuation of our business is dependent upon obtaining
further financing and achieving a break even or profitable level of operations.
The issuance of additional equity securities by us could result in a significant
dilution in the equity interests of our current or future stockholders.
Obtaining commercial loans, assuming those loans would be available, will
increase our liabilities and future cash commitments.

There are no assurances that we will be able to either (i)
achieve a level of revenues adequate to generate sufficient cash flow from
operations; or (ii) obtain additional financing through either private
placements, public offerings and/or bank financing necessary to support our
working capital requirements. To the extent that funds generated from operations
and any private placements, public offerings and/or bank financing are
insufficient, we will have to raise additional working capital. No assurance can
be given that additional financing will be available, or if available, will be
on terms acceptable to us. If adequate working capital is not available we may
not increase our operations.

These conditions raise substantial doubt about our ability to
continue as a going concern. The financial statements do not include any
adjustments relating to the recoverability and classification of asset carrying
amounts or the amount and classification of liabilities that might be necessary
should we be unable to continue as a going concern.

---

- 19 -

APPLICATION OF CRITICAL ACCOUNTING POLICIES

Our financial statements and accompanying notes are prepared in
accordance with generally accepted accounting principles in the United States.
Preparing financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenue,
and expenses. These estimates and assumptions are affected by managements
application of accounting policies. We believe that understanding the basis and
nature of the estimates and assumptions involved with the following aspects of
our financial statements is critical to an understanding of our financials.

In preparing financial statements in conformity with generally
accepted accounting principles, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements and revenues and expenses during the reported period. Actual results
could differ from those estimates.

Stock Based Compensation

We account for stock-based compensation under SFAS No. 123R,
"Share- based Payment " and SFAS No. 148, "Accounting for Stock-Based
Compensation--Transition and Disclosure--An amendment to SFAS No. 123. These
standards define a fair value based method of accounting for stock-based
compensation. In accordance with SFAS Nos. 123R and 148, the cost of stock-based
employee compensation is measured at the grant date based on the value of the
award and is recognized over the vesting period. The value of the stock-based
award is determined using the Black-Scholes option-pricing model, whereby
compensation cost is the excess of the fair value of the award as determined by
the pricing model at the grant date or other measurement date over the amount an
employee must pay to acquire the stock. The resulting amount is charged to
expense on the straight-line basis over the period in which we expect to receive
the benefit, which is generally the vesting period. During 2007 and 2006, we
recognized no compensation expense under SFAS No. 123R as no options were issued
to employees during these two periods (See Note 6).

Use of Estimates

The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenue and expenses during the reporting periods. Actual results could differ
from these estimates.

Mining Costs

Costs incurred to purchase, lease or otherwise acquire property
are capitalized when incurred. General exploration costs and costs to maintain
rights and leases are expensed as incurred. Management periodically reviews the
recoverability of the capitalized mineral properties and mining equipment.
Management takes into consideration various information including, but not
limited to, historical production records taken from previous mining operations,
results of exploration activities conducted to date, estimated future prices and
reports and opinions of outside consultants. When it is determined that a
project or property will be abandoned or its carrying value has been impaired, a
provision is made for any expected loss on the project or property.

Convertible Debentures

If the conversion feature of conventional convertible debt
provides for a rate of conversion that is below market value, this feature is
characterized as a beneficial conversion feature (BCF). A BCF is recorded by
the Company as a debt discount pursuant to EITF Issue No. 98-5 (EITF 98-05),
Accounting for Convertible Securities with Beneficial Conversion Features or
Contingency Adjustable Conversion Ratio, and EITF Issue No. 00-27,
Application of EITF Issue No. 98-5 to Certain Convertible Instruments. In
those circumstances, the convertible debt will be recorded net of the discount
related to the BCF. The Company amortizes the discount to interest expense over
the life of the debt using the effective interest method.

---

- 20 -

Loss per Share

We report earnings (loss) per share in accordance with SFAS No.
128, "Earnings per Share." Basic earnings (loss) per share is computed by
dividing income (loss) available to common shareholders by the weighted average
number of common shares available. Diluted earnings (loss) per share is computed
similar to basic earnings (loss) per share except that the denominator is
increased to include the number of additional common shares that would have been
outstanding if the potential common shares had been issued and if the additional
common shares were dilutive. Diluted earnings (loss) per share has not been
presented since the effect of the assumed conversion of options to purchase
common shares would have an anti-dilutive effect. The only potential common
shares as of December 31, 2007 were 160,200 options, 11,795,000 warrants, and
$1,030,815 of debt convertible into 2,477,283 shares of the our common stock
that have been excluded from the computation of diluted net loss per share
because the effect would have been anti-dilutive. If such shares were included
in diluted EPS, they would have resulted in weighted-average common shares of
44,753,559 and 37,704,029 for the year ended December 31, 2007 and 2006,
respectively.

Recent Accounting Pronouncements

SFAS No. 159- In February 2007, the FASB issued
Statement No. 159, The Fair Value Option for Financial Assets and Financial
LiabilitiesIncluding an amendment of FASB Statement No. 115.This
Statement permits entities to choose to measure many financial instruments and
certain other items at fair value. The objective is to improve financial
reporting by providing entities with the opportunity to mitigate volatility in
reported earnings caused by measuring related assets and liabilities differently
without having to apply complex hedge accounting provisions. This Statement is
expected to expand the use of fair value measurement, which is consistent with
the Boards long-term measurement objectives for accounting for financial
instruments. This Statement applies to all entities, including not-for-profit
organizations. Most of the provisions of this Statement apply only to entities
that elect the fair value option. However, the amendment to FASB Statement No.
115, Accounting for Certain Investments in Debt and Equity Securities,
applies to all entities with available-for-sale and trading securities. Some
requirements apply differently to entities that do not report net income. This
Statement is effective as of the beginning of an entitys first fiscal year that
begins after November 15, 2007. Early adoption is permitted as of the beginning
of a fiscal year that begins on or before November 15, 2007, provided the entity
also elects to apply the provisions of FASB Statement No. 157, Fair Value
Measurements.No entity is permitted to apply this Statement retrospectively
to fiscal years preceding the effective date unless the entity chooses early
adoption. The choice to adopt early should be made after issuance of this
Statement but within 120 days of the beginning of the fiscal year of adoption,
provided the entity has not yet issued financial statements, including required
notes to those financial statements, for any interim period of the fiscal year
of adoption. This Statement permits application to eligible items existing at
the effective date (or early adoption date). The Company has evaluated the
impact of the implementation of SFAS No. 159 and does not believe the impact
will be significant to the Company's overall results of operations or financial
position.

SFAS No. 141 (revised 2007) In December 2007, the FASB
issued Statement No. 141 (revised 2007), Business Combinations. This
statement replaces FASB Statement No. 141 Business Combinations.The
objective of this Statement is to improve the relevance, representational
faithfulness, and comparability of the information that a reporting entity
provides in its financial reports about a business combination and its effects.
To accomplish that, this Statement establishes principles and requirements for
how the acquirer 1) recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, and any noncontrolling
interest in the acquiree, 2) recognizes and measures the goodwill acquired in
the business combination or a gain from a bargain purchase, and 3) determines
what information to disclose to enable users of the financial statements to
evaluate the nature and financial effects of the business combination. This
Statement applies prospectively to business combinations for which the
acquisition date is on or after the beginning of the first annual reporting
period beginning on or after December 15, 2008. The Company is currently
assessing the potential effect of SFAS 141 (revised 2007) on its financial
statements.

SFAS No. 160 In December 2007, the FASB issued
Statement No. 160, Noncontrolling Interests in Consolidated Financial
Statementsan amendment of ARB No. 51.The objective of this Statement is to
improve the relevance, comparability, and transparency of the financial
information that a reporting entity provides in its consolidated financial
statements by establishing accounting and reporting standards that require 1)
the ownership interests in subsidiaries held by parties other than the parent be
clearly identified, labeled, and presented in the consolidated

---

- 21 -

statement of financial position within equity, but separate
from the parents equity, 2) the amount of consolidated net income attributable
to the parent and to the noncontrolling interest be clearly identified and
presented on the face of the consolidated statement of income, 3) changes in a
parents ownership interest while the parent retains its controlling financial
interest in its subsidiary be accounted for consistently, 4) when a subsidiary
is deconsolidated, any retained noncontrolling equity investment in the former
subsidiary be initially measured at fair value, and 5) entities provide
sufficient disclosures that clearly identify and distinguish between the
interests of the parent and the interests of the noncontrolling owners. This
Statement is effective for fiscal years, and interim periods within those fiscal
years, beginning on or after December 15, 2008. The Company is currently
assessing the potential effect of SFAS 160 on its financial statements.

SFAS No. 161- In December 2007, the FASB issued
Statement No. 161, Disclosures about Derivative Instruments and Hedging
Activitiesan amendment of FASB Statement No. 133. This Statement changes
the disclosure requirements for derivative instruments and hedging activities.
Entities are required to provide enhanced disclosures about (a) how and why an
entity uses derivative instruments, (b) how derivative instruments and related
hedged items are accounted for under Statement 133 and its related
interpretations, and (c) how derivative instruments and related hedged items
affect an entitys financial position, financial performance, and cash
flows.

This Statement is intended to enhance the current disclosure
framework in Statement 133. The Statement requires that objectives for using
derivative instruments be disclosed in terms of underlying risk and accounting
designation. This disclosure better conveys the purpose of derivative use in
terms of the risks that the entity is intending to manage. Disclosing the fair
values of derivative instruments and their gains and losses in a tabular format
should provide a more complete picture of the location in an entitys financial
statements of both the derivative positions existing at period end and the
effect of using derivatives during the reporting period. Disclosing information
about credit-risk-related contingent features should provide information on the
potential effect on an entitys liquidity from using derivatives. Finally, this
Statement requires cross-referencing within the footnotes, which should help
users of financial statements locate important information about derivative
instruments.

This Statement is effective for financial statements issued for
fiscal years and interim periods beginning after November 15, 2008, with early
application encouraged. This Statement encourages, but does not require,
comparative disclosures for earlier periods at initial adoption.

We are currently evaluating SFAS 161 and has not yet determined
its potential impact on its future results of operations or financial
position.

|Item 7. | Financial Statements.
|------- | ---------------------

Our financial statements are stated in United States dollars
(US$) and are prepared in accordance with United States Generally Accepted
Accounting Principles.

The following consolidated financial statements are filed as
part of this annual report:

|Independent Auditor's Report, dated April
      9, 2008                                                                                                   
|----------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                          
|Audited Balance Sheets as at December 31,
      2007 and December 31, 2006                                                                                
|                                                                                                                                                          
|Audited Statements of Operations for the
      year ended December 31, 2007 and for the year ended December 31, 2006                                      
|                                                                                                                                                          
|Audited Statements of Changes in
      Stockholders' Equity (Deficiency) for the period from March 19, 2004 (Date
      of Inception) to December 31, 2007
|                                                                                                                                                          
|Audited Statements of Cash Flows for the
      year ended December 31, 2007 and for the year ended December 31, 2006                                      
|                                                                                                                                                          
|Notes to the Consolidated Financial
      Statements                                                                                                      

---

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To The Board of Directors and Stockholders of Tornado Gold
International Corporation, Reno, Nevada

We have audited the accompanying balance sheet of Tornado Gold
International Corporation (An Exploratory Company) as of December 31, 2007 and
the related statements of operations, stockholders equity (deficit) and cash
flows for the years ended December 31, 2007 and 2006 and during the Companys
exploratory stage (March 19, 2004 through December 31, 2007). These financial
statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audits to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of Tornado Gold
International Corporation as of December 31, 2007, and the results of its
operations and its cash flows for the years ended December 31, 2007 and 2006,
and for the period from March 19, 2004 through December 31, 2007 in conformity
with accounting principles generally accepted in the United States of
America.

The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in Note
1 to the accompanying financial statements, the Company has no established
source of material revenue, has incurred a net loss from continuing operations
of $2,514,979 for the year ended December 31, 2007, had negative working capital
of $2,426,991, and had an accumulated deficit since its inception of $5,444,162,
all of which raise a substantial doubt about its ability to continue as a going
concern. Management's plan in regard to these matters is also discussed in Note
1. These financial statements do not include any adjustments that might result
from the outcome of this uncertainty.

Jonathon P. Reuben CPA An Accountancy Corporation
Torrance, California April 9, 2008

---

|F-2                                   
|--------------------------------------
|                                      
|Tornado Gold International Corporation
|(An Exploratory Stage Company)        
|BALANCE SHEET                         

|                                                                     |   | December 31 |  
|-------------------------------------------------------------------- | - | ----------- | -
|ASSETS                                                               |   | 2007        |  
|CURRENT ASSETS                                                       |   |             |  
|Cash and cash equivalents                                            | $ | 3,566       |  
|Prepaid Expenses                                                     |   | 14,008      |  
|                                                                     |   |             |  
|TOTAL CURRENT ASSETS                                                 |   | 17,574      |  
|                                                                     |   |             |  
|PROPERTY AND EQUIPMENT,                                              |   |             |  
|Mining claims                                                        |   | 581,048     |  
|Computer
      equipment, net                                        |   | 2,104       |  
|                                                                     |   |             |  
|OTHER ASSETS                                                         |   |             |  
|Deferred offering costs                                              |   | 2,500       |  
|Intangible
      assets                                              |   | 4,578       |  
|                                                                     |   |             |  
|TOTAL ASSETS                                                         | $ | 607,804     |  
|                                                                     |   |             |  
|LIABILITIES AND STOCKHOLDERS
      DEFICIT                          |   |             |  
|                                                                     |   |             |  
|CURRENT LIABILITIES                                                  |   |             |  
|Accounts payable - related party                                     | $ | 68,344      |  
|Accounts payable
      - others                                      |   | 110,043     |  
|Accrued expenses                                                     |   | 249,975     |  
|Loan Payable -
      related party                                   |   | 730,000     |  
|Notes payable and accrued
      interest                             |   | 132,011     |  
|Convertible debt
      and accrued interest payable, net of discount |   | 1,154,192   |  
|TOTAL CURRENT LIABILITIES                                            |   | 2,444,565   |  
|                                                                     |   |             |  
|COMMITMENTS AND CONTINGENCIES                                        |   | -           |  
|                                                                     |   |             |  
|STOCKHOLDERS' DEFICIT                                                |   |             |  
|Common stock;
      $0.001 par value; 100,000,000 shares             |   |             |  
|authorized;
      30,311,526 shares issued and outstanding           |   | 30,312      |  
|Additional paid
      in capital                                     |   | 2,077,507   |  
|Accumulated deficit                                                  |   | (704,993    | )
|Deficit
      accumulated during the exploratory stage               |   | (4,739,169  | )
|Subscribed warrants                                                  |   | 1,500,000   |  
|Stock
      subscription receivable                                  |   | (418        | )
|TOTAL STOCKHOLDERS' DEFICIT                                          |   | (1,836,761  | )
|                                                                     |   |             |  
|TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                          | $ | 607,804     |  

The accompanying notes are an integral part of these financial
statements

---

|F-3                                   
|--------------------------------------
|                                      
|Tornado Gold International Corporation
|(An Exploratory Stage Company)        
|STATEMENTS OF OPERATIONS              

|                                                      |   |                    |   |   |              |   |   | From       |  
|----------------------------------------------------- | - | ------------------ | - | - | ------------ | - | - | ---------- | -
|                                                      |   |                    |   |   |              |   |   | March 19,  |  
|                                                      |   |                    |   |   |              |   |   | 2004       |  
|                                                      |   | For the Year Ended |   |   | through      |  
|                                                      |   | December 31        |   |   | December 31, |  
|                                                      |   | 2007               |   |   | 2006         |   |   | 2007       |  
|                                                      |   |                    |   |   |              |   |   |            |  
|                                                      |   |                    |   |   |              |   |   |            |  
|                                                      |   |                    |   |   |              |   |   |            |  
|NET REVENUE                                           | $ | -                  |   | $ | -            |   | $ | -          |  
|                                                      |   |                    |   |   |              |   |   |            |  
|OPERATING EXPENSES                                    |   |                    |   |   |              |   |   |            |  
|Compensation expense on option
      grants           |   | -                  |   |   | 46,356       |   |   | 68,765     |  
|Mining
      exploration expenses                     |   | 167,957            |   |   | 705,287      |   |   | 1,329,175  |  
|General and administrative
      expenses             |   | 341,322            |   |   | 512,630      |   |   | 1,160,405  |  
|Loss on
      abandonment of mining claims            |   | 1,661,350          |   |   | -            |   |   | 1,661,350  |  
|TOTAL OPERATING EXPENSES                              |   | 2,170,629          |   |   | 1,264,273    |   |   | 4,219,695  |  
|                                                      |   |                    |   |   |              |   |   |            |  
|LOSS FROM OPERATIONS                                  |   | (2,170,629         | ) |   | (1,264,273   | ) |   | (4,219,695 | )
|                                                      |   |                    |   |   |              |   |   |            |  
|OTHER INCOME (EXPENSE)                                |   |                    |   |   |              |   |   |            |  
|Accrued
      potential damages on breach of contract |   | (249,975           | ) |   | -            |   |   | (249,975   | )
|Interest expense                                      |   | (94,375            | ) |   | (81,326      | ) |   | (269,499   | )
|TOTAL OTHER INCOME (EXPENSE)                          |   | (344,350           | ) |   | (81,326      | ) |   | (519,474   | )
|                                                      |   |                    |   |   |              |   |   |            |  
|LOSS BEFORE PROVISION FOR INCOME TAXES                |   | (2,514,979         | ) |   | (1,345,599   | ) |   | (4,739,169 | )
|                                                      |   |                    |   |   |              |   |   |            |  
|PROVISION FOR INCOME TAXES                            |   | -                  |   |   | -            |   |   | -          |  
|                                                      |   |                    |   |   |              |   |   |            |  
|NET LOSS                                              | $ | (2,514,979         | ) | $ | (1,345,599   | ) | $ | (4,739,169 | )
|                                                      |   |                    |   |   |              |   |   |            |  
|NET LOSS PER SHARE - BASIC AND DILUTED                | $ | (0.08              | ) | $ | (0.05        | ) |   |            |  
|                                                      |   |                    |   |   |              |   |   |            |  
|WEIGHTED AVERAGE COMMON EQUIVALENT                    |   |                    |   |   |              |   |   |            |  
|SHARES OUTSTANDING - BASIC AND
      DILUTED          |   | 30,111,526         |   |   | 29,360,954   |   |   |            |  

The accompanying notes are an integral part of these financial
statements

---

|F-4                                         
|--------------------------------------------
|                                            
|Tornado Gold International Corporation      
|(An Exploratory Stage Company)              
|STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)

|                                                           |  |          |  |                |   |   |            |   |   |                |   |   |             |   |   | **Deficit**     |   |   |            |  |   |            |   |   |            |  
|---------------------------------------------------------- |  | -------- |  | -------------- | - | - | ---------- | - | - | -------------- | - | - | ----------- | - | - | --------------- | - | - | ---------- |  | - | ---------- | - | - | ---------- | -
|                                                           |  |          |  |                |   |   |            |   |   |                |   |   |             |   |   | **Accumulated** |   |   |            |  |   |            |   |   |            |  
|                                                           |  |          |  |                |   |   |            |   |   | **Additional** |   |   |             |   |   | **During the**  |   |   |            |  |   | **Sub-**   |   |   |            |  
|                                                           |  |          |  |                |   |   |            |   |   | Paid-in        |   |   | Accumulated |   |   | **Exploratory** |   |   | Subscribed |  |   | scription  |   |   |            |  
|                                                           |  | Date     |  | Shares         |   |   | Amount     |   |   | Capital        |   |   | Deficit     |   |   | Stage           |   |   | Warrant    |  |   | Receivable |   |   | Total      |  
|                                                           |  |          |  |                |   |   |            |   |   |                |   |   |             |   |   |                 |   |   |            |  |   |            |   |   |            |  
|                                                           |  |          |  |                |   |   |            |   |   |                |   |   |             |   |   |                 |   |   |            |  |   |            |   |   |            |  
|Balance, December 31, 2003                                 |  |          |  | 2,486,299,200  |   | $ | 2,486,299  |   | $ | -              |   | $ | (2,574,457  | ) | $ | -               |   | $ | -          |  | $ | -          |   | $ | (88,158    | )
|                                                           |  |          |  |                |   |   |            |   |   |                |   |   |             |   |   |                 |   |   |            |  |   |            |   |   |            |  
|Redemption of shares for Saltys                            |  | 3/19/04  |  | (2,091,093,840 | ) |   | (2,091,094 | ) |   | -              |   |   | 2,087,402   |   |   | -               |   |   | -          |  |   | -          |   |   | (3,692     | )
|Redemption of shares for cash                              |  | 3/19/04  |  | (375,563,760   | ) |   | (375,564   | ) |   | -              |   |   | (194,436    | ) |   | -               |   |   | -          |  |   | -          |   |   | (570,000   | )
|Issuance of shares for cash                                |  | 3/19/04  |  | 34,372,800     |   |   | 34,373     |   |   | -              |   |   | (24,373     | ) |   |                 |   |   | -          |  |   | -          |   |   | 10,000     |  
|Fair value of options granted to consultants               |  | 3/19/04  |  | -              |   |   | -          |   |   | 4,540          |   |   | -           |   |   | -               |   |   | -          |  |   | -          |   |   | 4,540      |  
|Gain on settlement of notes                                |  | 4/15/04  |  | -              |   |   | -          |   |   | 49,309         |   |   | -           |   |   | -               |   |   | -          |  |   | -          |   |   | 49,309     |  
|Net income (loss)                                          |  |          |  | -              |   |   | -          |   |   | -              |   |   | 871         |   |   | (261,732        | ) |   | -          |  |   | -          |   |   | (260,861   | )
|                                                           |  |          |  |                |   |   |            |   |   |                |   |   |             |   |   |                 |   |   |            |  |   |            |   |   |            |  
|Balance, December 31, 2004                                 |  |          |  | 54,014,400     |   |   | 54,014     |   |   | 53,849         |   |   | (704,993    | ) |   | (261,732        | ) |   | -          |  |   | -          |   |   | (858,862   | )
|                                                           |  |          |  |                |   |   |            |   |   |                |   |   |             |   |   |                 |   |   |            |  |   |            |   |   |            |  
|Conversion of notes payable and accrued interest           |  |          |  |                |   |   |            |   |   |                |   |   |             |   |   |                 |   |   |            |  |   |            |   |   |            |  
|into shares of common stock                                |  | 4/15/05  |  | 1,325,126      |   |   | 1,325      |   |   | 1,102,946      |   |   | -           |   |   | -               |   |   | -          |  |   | -          |   |   | 1,104,271  |  
|Redemption of shares for cash                              |  | 4/15/05  |  | (27,172,800    | ) |   | (27,172    | ) |   | 19,266         |   |   | -           |   |   | -               |   |   | -          |  |   | -          |   |   | (7,906     | )
|Issuance of shares for cash                                |  | 12/13/05 |  | 625,000        |   |   | 625        |   |   | 499,375        |   |   | -           |   |   | -               |   |   | -          |  |   | (418       | ) |   | 499,582    |  
|Fair value of options granted to consultants               |  | Various  |  | -              |   |   | -          |   |   | 17,869         |   |   | -           |   |   | -               |   |   | -          |  |   | -          |   |   | 17,869     |  
|Net loss                                                   |  |          |  | -              |   |   | -          |   |   | -              |   |   | -           |   |   | (616,859        | ) |   | -          |  |   | -          |   |   | (616,859   | )
|                                                           |  |          |  |                |   |   |            |   |   |                |   |   |             |   |   |                 |   |   |            |  |   |            |   |   |            |  
|Balance, December 31, 2005                                 |  |          |  | 28,791,726     |   |   | 28,792     |   |   | 1,693,305      |   |   | (704,993    | ) |   | (878,591        | ) |   | -          |  |   | (418       | ) |   | 138,095    |  
|                                                           |  |          |  |                |   |   |            |   |   |                |   |   |             |   |   |                 |   |   |            |  |   |            |   |   |            |  
|Exercise of options                                        |  | 6/6/06   |  | 24,800         |   |   | 25         |   |   | 3,695          |   |   | -           |   |   | -               |   |   | -          |  |   |            |   |   | 3,720      |  
|Issuance of shares for cash                                |  | 7/16/06  |  | 1,145,000      |   |   | 1,145      |   |   | 342,355        |   |   | -           |   |   | -               |   |   | -          |  |   | -          |   |   | 343,500    |  
|Prepaid Warrants for 5,000,000 common shares               |  | 7/16/06  |  | -              |   |   | -          |   |   | -              |   |   | -           |   |   | -               |   |   | 1,500,000  |  |   | -          |   |   | 1,500,000  |  
|Offering costs                                             |  | 7/16/06  |  | -              |   |   | -          |   |   | (173,404       | ) |   | -           |   |   | -               |   |   | -          |  |   | -          |   |   | (173,404   | )
|Shares issued as part consideration for mining
      claim |  | 8/24/06  |  | 50,000         |   |   | 50         |   |   | 33,500         |   |   | -           |   |   | -               |   |   | -          |  |   | -          |   |   | 33,550     |  
|Shares issued as part consideration for mining claim       |  | 11/23/06 |  | 100,000        |   |   | 100        |   |   | 32,900         |   |   | -           |   |   | -               |   |   | -          |  |   | -          |   |   | 33,000     |  
|Fair value of options granted to consultants               |  | Various  |  | -              |   |   | -          |   |   | 46,356         |   |   | -           |   |   | -               |   |   | -          |  |   | -          |   |   | 46,356     |  
|Net loss                                                   |  |          |  | -              |   |   | -          |   |   | -              |   |   | -           |   |   | (1,345,599      | ) |   | -          |  |   | -          |   |   | (1,345,599 | )
|                                                           |  |          |  |                |   |   |            |   |   |                |   |   |             |   |   |                 |   |   |            |  |   |            |   |   |            |  
|Balance, December 31, 2006                                 |  |          |  | 30,111,526     |   |   | 30,112     |   |   | 1,978,707      |   |   | (704,993    | ) |   | (2,224,190      | ) |   | 1,500,000  |  |   | (418       | ) |   | 579,218    |  
|Shares issued as part consideration for mining
      claim |  | 8/27/07  |  | 200,000        |   |   | 200        |   |   | 53,800         |   |   | -           |   |   | -               |   |   | -          |  |   | -          |   |   | 54,000     |  
|Beneficial conversion feature of convertible debenture     |  |          |  | -              |   |   | -          |   |   | 45,000         |   |   | -           |   |   | -               |   |   | -          |  |   | -          |   |   | 45,000     |  
|Net loss                                                   |  |          |  | -              |   |   | -          |   |   | -              |   |   |             |   |   | (2,514,979      | ) |   | -          |  |   | -          |   |   | (2,514,979 | )
|                                                           |  |          |  |                |   |   |            |   |   |                |   |   |             |   |   |                 |   |   |            |  |   |            |   |   |            |  
|Balance, December 31, 2007                                 |  |          |  | 30,311,526     |   |   | 30,312     |   |   | 2,077,507      |   |   | (704,993    | ) |   | (4,739,169      | ) |   | 1,500,000  |  |   | (418       | ) |   | (1,836,761 | )

The accompanying notes are an integral part of these financial
statements

---

|F-5                                   
|--------------------------------------
|                                      
|Tornado Gold International Corporation
|(An Exploratory Stage Company)        
|STATEMENTS OF CASH FLOWS              

|                                                        |   |                    |   |   |              |   |   | From           |  
|------------------------------------------------------- | - | ------------------ | - | - | ------------ | - | - | -------------- | -
|                                                        |   |                    |   |   |              |   |   | March 19, 2004 |  
|                                                        |   | For the Year Ended |   |   | through      |  
|                                                        |   | December 31        |   |   | December 31, |  
|                                                        |   | 2007               |   |   | 2006         |   |   | 2007           |  
|                                                        |   |                    |   |   |              |   |   |                |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                   |   |                    |   |   |              |   |   |                |  
|Net loss                                                | $ | (2,514,979         | ) | $ | (1,345,599   | ) | $ | (4,739,169     | )
|Adjustment to reconcile
      net loss to net cash      |   |                    |   |   |              |   |   |                |  
|used in
      operating activities:                     |   |                    |   |   |              |   |   |                |  
|Loss on abandonment of mining claims                    |   | 1,318,475          |   |   |              |   |   | 1,318,475      |  
|Value of options and warrants granted for services      |   | -                  |   |   | 46,356       |   |   | 68,765         |  
|Amortization                                            |   | 2,289              |   |   | -            |   |   | 2,289          |  
|Depreciation                                            |   | 1,108              |   |   | 111          |   |   | 1,219          |  
|Changes in:                                             |   |                    |   |   |              |   |   |                |  
|Prepaid
      expenses and other current assets         |   | (14,008            | ) |   | 6,395        |   |   | (9,008         | )
|Deferred offering costs                                 |   |                    |   |   | -            |   |   | -              |  
|Accounts
      payable                                  |   | 98,080             |   |   | 67,007       |   |   | 253,489        |  
|Accrued expenses                                        |   | 249,975            |   |   | -            |   |   | 249,975        |  
|Notes
      payable                                     |   | 94,375             |   |   | 81,326       |   |   | 188,388        |  
|Net cash used in
      operating activities             |   | (764,685           | ) |   | (1,144,404   | ) |   | (2,665,577     | )
|                                                        |   |                    |   |   |              |   |   |                |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                   |   |                    |   |   |              |   |   |                |  
|Purchase of mining claims                               |   | (163,375           | ) |   | (1,091,265   | ) |   | (1,778,973     | )
|Purchase of equipment                                   |   | (1,980             | ) |   | (1,343       | ) |   | (3,323         | )
|Website
      design costs                              |   | -                  |   |   | (6,868       | ) |   | (6,868         | )
|Net cash used in
      investing activities             |   | (165,355           | ) |   | (1,099,476   | ) |   | (1,789,164     | )
|                                                        |   |                    |   |   |              |   |   |                |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                   |   |                    |   |   |              |   |   |                |  
|Proceeds from loan payable                              |   | 792,000            |   |   | 649,838      |   |   | 2,897,816      |  
|Proceeds from issuance of common stock                  |   | -                  |   |   | 347,220      |   |   | 856,802        |  
|Proceeds
      from subscribed warrants                 |   | -                  |   |   | 1,500,000    |   |   | 1,500,000      |  
|Payment on note payable                                 |   | -                  |   |   | -            |   |   | (42,500        | )
|Repurchase
      of shares on common stock              |   | -                  |   |   | -            |   |   | (577,906       | )
|Offering costs                                          |   | (2,500             | ) |   | (173,405     | ) |   | (175,905       | )
|Net cash provided by financing
      activities         |   | 789,500            |   |   | 2,323,653    |   |   | 4,458,307      |  
|                                                        |   |                    |   |   |              |   |   |                |  
|NET INCREASE (DECREASE) IN CASH AND                     |   |                    |   |   |              |   |   |                |  
|CASH EQUIVALENTS                                        |   | (140,540           | ) |   | 79,773       |   |   | 3,566          |  
|                                                        |   |                    |   |   |              |   |   |                |  
|CASH AND CASH EQUIVALENTS, Beginning of
      year      |   | 144,106            |   |   | 64,333       |   |   | -              |  
|                                                        |   |                    |   |   |              |   |   |                |  
|CASH AND CASH EQUIVALENTS, End of year                  | $ | 3,566              |   | $ | 144,106      |   | $ | 3,566          |  
|                                                        |   |                    |   |   |              |   |   |                |  
|SUPPLEMENTAL DISCLOSURES OF CASH
      FLOW INFORMATION |   |                    |   |   |              |   |  
|                                                        |   |                    |   |   |              |   |   |                |  
|Interest paid                                           | $ | -                  |   | $ | -            |   |   |                |  
|Income taxes paid                                       | $ | -                  |   | $ | -            |   |   |                |  

Noncash investing and financing activities:

In 2007, the Company issued convertible notes on which the
Company recognized a beneficial conversion feature of $45,000 which was charged
as a discount to the underlying face value of the obligations and a credit to
equity (See Note 7).

In connection with the acquisition of the Illipah claims, the
Company issued 200,000 shares of its common stock (See Note 4). The shares were
valued at $54,000.

In 2006, the Company issued 150,000 shares of its common stock
under its purchase agreement of the Illipah mining claims. The 150,000 shares
were valued at $66,550, the fair value of the shares on date of issuance.

The accompanying notes are an integral part of these financial
statements

---

|F-6                                   
|--------------------------------------
|                                      
|TORNADO GOLD INTERNATIONAL CORPORATION
|(An Exploratory Stage Company)        
|NOTES TO FINANCIAL STATEMENTS         

NOTE 1  ORGANIZATION AND BASIS OF PRESENTATION

Organization

Tornado Gold International Corporation (formerly Nucotec, Inc.)
was incorporated in the state of Nevada on October 8, 2001. On July 7, 2004, the
name of the company was officially changed to Tornado Gold International
Corporation (the "Company"). The Company is currently in the exploratory stage
as defined in Financial Accounting Standards Board (FASB) Statement of
Financial Accounting Standards (SFAS) No. 7 and has been March 19, 2004, when
it changed its principal activity to the exploration of mining properties for
future commercial development and production (See Note 3). On February 14, 2007,
the Company changed its domicile from Nevada to Delaware.

Basis of Presentation and Going Concern

The accompanying financial statements have been prepared in
conformity with accounting principles generally accepted in the United States of
America, which contemplate continuation of the Company as a going concern. The
Company has no established source of material revenue, has incurred a net loss
for the year ended December 31, 2007 of $2,514,979, had negative working capital
of $2,426,991, and had an accumulated deficit since its inception of $5,444,162.
These conditions raise substantial doubt as to the Company's ability to continue
as a going concern. These financial statements do not include any adjustments
that might result from the outcome of this uncertainty. These financial
statements do not include any adjustments relating to the recoverability and
classification of recorded asset amounts, or amounts and classification of
liabilities that might be necessary should the Company be unable to continue as
a going concern.

Management recognizes that the Company must generate additional
resources to enable it to continue operations. Management intends to raise
additional funds through debt and/or equity financing or through other means
that it deems necessary. However, no assurance can be given that the Company
will be successful in raising additional capital. Further, even if the company
raises additional capital, there can be no assurance that the Company will
achieve profitability or positive cash flow. If management is unable to raise
additional capital and expected significant revenues do not result in positive
cash flow, the Company will not be able to meet its obligations and may have to
cease operations.

Stock Split

On April 19, 2004, the Company authorized a 50-for-1 stock
split. On August 18, 2004, the Company authorized a 6.82 -for-1 stock split. On
May 16, 2005, the Company authorized a 1.20 -for-1 stock split. All references
in the accompanying financial statements to the number of shares outstanding and
per-share amounts have been restated to reflect the various indicated stock
splits.

---

F-7

NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Stock Based Compensation

The Company accounts for stock-based compensation under SFAS
No. 123R, "Share- based Payment " and SFAS No. 148, "Accounting for Stock-Based
Compensation--Transition and Disclosure--An amendment to SFAS No. 123. These
standards define a fair value based method of accounting for stock-based
compensation. In accordance with SFAS Nos. 123R and 148, the cost of stock-based
employee compensation is measured at the grant date based on the value of the
award and is recognized over the vesting period. The value of the stock-based
award is determined using the Black-Scholes option-pricing model, whereby
compensation cost is the excess of the fair value of the award as determined by
the pricing model at the grant date or other measurement date over the amount an
employee must pay to acquire the stock. The resulting amount is charged to
expense on the straight-line basis over the period in which the Company expects
to receive the benefit, which is generally the vesting period. During 2007 and
2006, the Company recognized no compensation expense under SFAS No. 123R as no
options were issued to employees during these two periods (See Note 6).

As of April 15, 2005, the Company adopted its 2005 stock option
plan to compensate its directors. As of September 30, 2007, no options have been
granted to the directors.

Use of Estimates

The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenue and expenses during the reporting periods. Actual results could differ
from these estimates.

Fair Value of Financial Instruments

The Companys financial instruments consist of cash and cash
equivalents, accounts payable, accrued expenses and notes payable, Pursuant to
SFAS No. 107, Disclosures About Fair Value of Financial Instruments,
the Company is required to estimate the fair value of all financial instruments
at the balance sheet date. The Company considers the carrying values of its
financial instruments in the financial statements to approximate their fair
values.

Cash and Cash Equivalents

For purposes of the statements of cash flows, the Company
defines cash equivalents as all highly liquid debt instruments purchased with a
maturity of three months or less, plus all certificates of deposit.

Property and Equipment

Property and equipment are stated at cost less accumulated
depreciation and amortization. Depreciation and amortization are calculated
using the straight-line method and with useful lives used in computing
depreciation of 3 years. When property and equipment are retired or otherwise
disposed of, the related cost and accumulated depreciation are removed from the
respective accounts, and any gain or loss is included in operations.
Expenditures for maintenance and repairs are charged to operations as incurred;
additions, renewals and betterments are capitalized.

---

F-8

Long- Lived Assets

The Company accounts for its long-lived assets in accordance
with SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets." SFAS No. 144 requires that long-lived assets be reviewed for impairment
whenever events or changes in circumstances indicate that the historical cost
carrying value of an asset may no longer be appropriate. The Company assesses
recoverability of the carrying value of an asset by estimating the future net
cash flows expected to result from the asset, including eventual disposition. If
the future net cash flows are less than the carrying value of the asset, an
impairment loss is recorded equal to the difference between the asset's carrying
value and fair value or disposable value. As of December 31, 2007, the Company
did not deem any of its long-term assets to be impaired.

Concentration of Credit Risk

Financial instruments, which potentially subject the Company to
concentrations of credit risk, consist of cash. The Company places its cash with
high quality financial institutions and at times may exceed the FDIC $100,000
insurance limit. The Company extends credit based on an evaluation of the
customer's financial condition, generally without collateral. The Company
monitors its exposure for credit losses and maintains allowances for anticipated
losses, as required.

Revenue Recognition

The Company has not generated any revenue from its mining
operations.

Mining Costs

Costs incurred to purchase, lease or otherwise acquire property
are capitalized when incurred. General exploration costs and costs to maintain
rights and leases are expensed as incurred. Management periodically reviews the
recoverability of the capitalized mineral properties and mining equipment.
Management takes into consideration various information including, but not
limited to, historical production records taken from previous mining operations,
results of exploration activities conducted to date, estimated future prices and
reports and opinions of outside consultants. When it is determined that a
project or property will be abandoned or its carrying value has been impaired, a
provision is made for any expected loss on the project or property.

Website Development Costs

Under FASB Emerging Issues Task Force Statement 00-2,
Accounting for Web Site Development Costs ("EITF 00-2"), costs and expenses
incurred during the planning and operating stages of the Company's web site
development are expensed as incurred. Under EITF 00-2, costs incurred in the web
site application and infrastructure development stages are capitalized by the
Company and amortized to expense over the web site's estimated useful life or
period of benefit. As of December 31, 2007, the Company had net capitalized
costs of $4,578 related to its web site development, which are being depreciated
on a straight-line basis over an estimated useful life of 3 years. Amortization
expense for the year ended December 31, 2007 and 2006 amounted to $2,289 and $0,
respectively.

A schedule of amortization expense for the three years ending
December 31, 2009 is as follows:

December 31, 2008
    $
    2,289December 31, 2009
    
    2,289$
    4,578


---

F-9

Convertible Debentures

If the conversion feature of conventional convertible debt
provides for a rate of conversion that is below market value, this feature is
characterized as a beneficial conversion feature (BCF). A BCF is recorded by
the Company as a debt discount pursuant to EITF Issue No. 98-5 (EITF 98-05),
Accounting for Convertible Securities with Beneficial Conversion Features or
Contingency Adjustable Conversion Ratio, and EITF Issue No. 00-27,
Application of EITF Issue No. 98-5 to Certain Convertible Instruments. In
those circumstances, the convertible debt will be recorded net of the discount
related to the BCF. The Company amortizes the discount to interest expense over
the life of the debt using the effective interest method.

Income Taxes

The Company accounts for income taxes in accordance with SFAS
No. 109, "Accounting for Income Taxes." Deferred taxes are provided on the
liability method whereby deferred tax assets are recognized for deductible
temporary differences, and deferred tax liabilities are recognized for taxable
temporary differences. Temporary differences are the differences between the
reported amounts of assets and liabilities and their tax bases. Deferred tax
assets are reduced by a valuation allowance when, in the opinion of management,
it is more likely than not that some portion or all of the deferred tax assets
will be realized. Deferred tax assets and liabilities are adjusted for the
effects of changes in tax laws and rates on the date of enactment.

Loss Per Share

The Company reports earnings (loss) per share in accordance
with SFAS No. 128, "Earnings per Share." Basic earnings (loss) per share is
computed by dividing income (loss) available to common shareholders by the
weighted average number of common shares available. Diluted earnings (loss) per
share is computed similar to basic earnings (loss) per share except that the
denominator is increased to include the number of additional common shares that
would have been outstanding if the potential common shares had been issued and
if the additional common shares were dilutive. Diluted earnings (loss) per share
has not been presented since the effect of the assumed conversion of options to
purchase common shares would have an anti-dilutive effect. The only potential
common shares as of December 31, 2007 were 160,200 options, 11,795,000 warrants,
and $1,030,815 of debt convertible into 2,477,283 shares of the Companys common
stock that have been excluded from the computation of diluted net loss per share
because the effect would have been anti-dilutive. If such shares were included
in diluted EPS, they would have resulted in weighted-average common shares of
44,753,559 and 37,704,029 for the year ended December 31, 2007 and 2006,
respectively.

Recent Accounting Pronouncement

SFAS No. 159- In February 2007, the FASB issued
Statement No. 159, The Fair Value Option for Financial Assets and Financial
LiabilitiesIncluding an amendment of FASB Statement No. 115.This
Statement permits entities to choose to measure many financial instruments and
certain other items at fair value. The objective is to improve financial
reporting by providing entities with the opportunity to mitigate volatility in
reported earnings caused by measuring related assets and liabilities differently
without having to apply complex hedge accounting provisions. This Statement is
expected to expand the use of fair value measurement, which is consistent with
the Boards long-term measurement objectives for accounting for financial
instruments. This Statement applies to all entities, including not-for-profit
organizations. Most of the provisions of this Statement apply only to entities
that elect the fair value option. However, the amendment to FASB Statement No.
115, Accounting for Certain Investments in Debt and Equity Securities,
applies to all entities with available-for-sale and trading securities. Some
requirements apply differently to entities that do not report net income. This
Statement is effective as of the beginning of an entitys first fiscal year that
begins after November 15, 2007. Early adoption is permitted as of the beginning
of a fiscal year that begins on or before November 15, 2007, provided the entity
also elects to apply the provisions of FASB Statement No. 157, Fair Value
Measurements.No

---

F-10

entity is permitted to apply this Statement retrospectively to
fiscal years preceding the effective date unless the entity chooses early
adoption. The choice to adopt early should be made after issuance of this
Statement but within 120 days of the beginning of the fiscal year of adoption,
provided the entity has not yet issued financial statements, including required
notes to those financial statements, for any interim period of the fiscal year
of adoption. This Statement permits application to eligible items existing at
the effective date (or early adoption date). The Company has evaluated the
impact of the implementation of SFAS No. 159 and does not believe the impact
will be significant to the Company's overall results of operations or financial
position.

SFAS No. 141 (revised 2007) In December 2007, the FASB
issued Statement No. 141 (revised 2007), Business Combinations. This
statement replaces FASB Statement No. 141 Business Combinations.The
objective of this Statement is to improve the relevance, representational
faithfulness, and comparability of the information that a reporting entity
provides in its financial reports about a business combination and its effects.
To accomplish that, this Statement establishes principles and requirements for
how the acquirer 1) recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, and any noncontrolling
interest in the acquiree, 2) recognizes and measures the goodwill acquired in
the business combination or a gain from a bargain purchase, and 3) determines
what information to disclose to enable users of the financial statements to
evaluate the nature and financial effects of the business combination. This
Statement applies prospectively to business combinations for which the
acquisition date is on or after the beginning of the first annual reporting
period beginning on or after December 15, 2008. The Company is currently
assessing the potential effect of SFAS 141 (revised 2007) on its financial
statements.

SFAS No. 160 In December 2007, the FASB issued
Statement No. 160, Noncontrolling Interests in Consolidated Financial
Statementsan amendment of ARB No. 51.The objective of this Statement is to
improve the relevance, comparability, and transparency of the financial
information that a reporting entity provides in its consolidated financial
statements by establishing accounting and reporting standards that require 1)
the ownership interests in subsidiaries held by parties other than the parent be
clearly identified, labeled, and presented in the consolidated statement of
financial position within equity, but separate from the parents equity, 2) the
amount of consolidated net income attributable to the parent and to the
noncontrolling interest be clearly identified and presented on the face of the
consolidated statement of income, 3) changes in a parents ownership interest
while the parent retains its controlling financial interest in its subsidiary be
accounted for consistently, 4) when a subsidiary is deconsolidated, any retained
noncontrolling equity investment in the former subsidiary be initially measured
at fair value, and 5) entities provide sufficient disclosures that clearly
identify and distinguish between the interests of the parent and the interests
of the noncontrolling owners. This Statement is effective for fiscal years, and
interim periods within those fiscal years, beginning on or after December 15,
2008. The Company is currently assessing the potential effect of SFAS 160 on its
financial statements.

SFAS No. 161- In December 2007, the FASB issued
Statement No. 161, Disclosures about Derivative Instruments and Hedging
Activitiesan amendment of FASB Statement No. 133. This Statement changes the
disclosure requirements for derivative instruments and hedging activities.
Entities are required to provide enhanced disclosures about (a) how and why an
entity uses derivative instruments, (b) how derivative instruments and related
hedged items are accounted for under Statement 133 and its related
interpretations, and (c) how derivative instruments and related hedged items
affect an entitys financial position, financial performance, and cash
flows.

This Statement is intended to enhance the current disclosure
framework in Statement 133. The Statement requires that objectives for using
derivative instruments be disclosed in terms of underlying risk and accounting
designation. This disclosure better conveys the purpose of derivative use in
terms of the risks that the entity is intending to manage. Disclosing the fair
values of derivative instruments and their gains and losses in a tabular format
should provide a more complete picture of the location in an entitys financial
statements of both the derivative positions existing at period end and the
effect of using derivatives during the reporting period. Disclosing information
about credit-risk-related contingent

---

F-11

features should provide information on the potential effect on
an entitys liquidity from using derivatives. Finally, this Statement requires
cross-referencing within the footnotes, which should help users of financial
statements locate important information about derivative instruments.

This Statement is effective for financial statements issued for
fiscal years and interim periods beginning after November 15, 2008, with early
application encouraged. This Statement encourages, but does not require,
comparative disclosures for earlier periods at initial adoption.

The Company is currently evaluating SFAS 161 and has not yet
determined its potential impact on its future results of operations or financial
position.

NOTE 3  COMPUTER EQUIPMENT

A summary of computer equipment at December 31, 2007 is as
follows:

Computer equipment
    $
    3,323Accumulated depreciation
    
    (1,219
    )$
    2,104


Depreciation expense for the year ended December 31, 2007 and
2006 amounted to $1,108 and $111, respectively.

NOTE 4 - MINING CLAIMS

Illiipah and NT Green

As of January 2007, the Company leased 16 mining properties of
  which 15 was leased from Mr. Carl Pescio, a former director of the Company,
  and one property owned by the Company’s president and another director.
  Mr. Pescio transferred the 15 properties he owned to Allied Nevada Gold Holdings,
  LLC (“Allied”). In 2007, the Company was in breach of its lease
  of the 15 properties and entered into an agreement with Allied effective January
  1, 2008, whereby the Company returned all mining properties leased with the
  exception of the Illipah and NT Green claims. The Company charged off to operations
  in 2007 the capitalized cost of the abandoned properties totaling $1,661,350.
  The new agreement has a term of five year. Under the agreement, the Company
  is responsible to pay a 2% overriding royalty on the net smelter returns from
  the production of the minerals on the Illipah claim. The agreement also requires
  the Company to incur exploration and development expenses as follows:

On or before December 31, 2008
    $
    150,000On or before December 31, 2009
    $
    200,000On or before December 31, 2010 andDecember 31, of each succeedingyear during the term of the agreement
    $
    400,000


The agreement provides for a credit for previous expenditures
incurred on these two properties of no more than $250,000 per property. In
addition, the Company agreed to pay Allied $100,000 on February 6, 2008, and pay
$70,000 on June 30 of each and succeeding year during the term of this
agreement. The annual payment will be adjusted if on or before June 30, of any
year during the term of the agreement, Company notifies Allied of its intent to
surrender any of the unpatented mining claims subject to the agreement. The
agreement further provides that the Company has the option to earn and vest an
undivided sixty percent (60%) interest in a property and to form a joint venture
with Allied for the management and ownership of the property when the Company
has incurred and paid expenditures in the amount of $1,500,000 on a particular
property.

---

F-12

Pursuant to the Companys agreement on the lease of Illipah,
the Company issued 200,000 shares of its common stock on August 27, 2007. The
shares were valued at $54,000 and were included mining claims as reflected in
the Companys balance sheet.

Jack Creek Property

On October 3, 2005, the Company paid the Bureau of Land
Management $30,875 as consideration on the Exploration License and Option to
Lease Agreement entered into between the Company and Mr. Earl Abbott, and
Stanley Keith ("the owners"), to explore 247 claims (nearly 5,000 acres) known
as the Jack Creek Property. Mr. Abbott is the Company's President and Mr. Keith
was a Company Director through 2006.

The Company entered into a definitive Exploration License and
Option to Lease Agreement for the above claims for a period of twenty years.
Under this agreement, the Company is responsible to make minimum lease payments
to the owners as follows:

Due Date
    
    AmountUpon signing
    $
    22,5001st anniversary
    $
    30,0002nd anniversary
    $
    37,5003rd anniversary
    $
    50,0004th anniversary
    $
    62,5005th anniversary and eachanniversary thereafter
    $
    100,000


If any payments due by the Company to the owners are not paid
within 30 days of its due date, interest will begin to accrue on the late
payment at a rate of 2% over the prime rate established by the Department of
Business and Industry of the State of Nevada.

Upon completion of a bankable feasibility study and payments
totaling $140,000, all subsequent payments will convert into advance minimum
royalty payments that are credited against the 4% production royalty due.

The Company shall have the option to purchase one-half (1/2) of
the royalty applicable to the property representing two percent (2%) of the Net
Smelter Returns. The Company shall have the right to elect to purchase such part
of the royalty in increments representing one percent (1%) of the Net Smelter
Returns and the purchase price for each such increment shall be $1,500,000. The
Company shall have the option to purchase one-half (1/2) of the area-of-interest
royalty applicable to mineral rights, mining claims and properties which the
Company acquires from third parties representing one-half percent (.5%) of the
Net Smelter Returns. The purchase price for such part of the area-of-interest
royalty shall be $500,000 for the one-half percent (.5%) of the area-of-interest
royalty applicable to mineral rights, mining claims and properties which the
Company acquires from any third party.

The Company shall be responsible for all environmental
liabilities and reclamation costs it creates and indemnifies the owners against
any such claims or obligations. The Company can terminate the lease at any time
by giving 30 days notice provided that there are no outstanding environmental or
reclamation liabilities and that all lease and production royalty payments are
current.

In addition, on August 7, 2006, the Company acquired an option
for 53 additional claims (approx 1,000 acres) at the Jack Creek Property. The
option was acquired from Gateway Gold (USA) Corp. through two of the Companys
directors, Earl Abbott and Stanley Keith, and is subject to the Area of Interest
clause in the original Jack Creek agreement between the Company and those
directors that the Company announced in its October 3, 2005, news release. The
Company has the option to earn a 50% undivided interest in the 53 claims through
its expenditure on the claims of a total of $500,000 in various stages by March
1, 2007, 2008, and 2009. Thereafter, the Company and Gateway Gold could form a
joint venture; but, if Gateway declines to participate at its 50% level, the
Company could exercise its option to earn an

---

F-13

additional 20% in the claims through its expenditure on the
claims of an additional $500,000 in two equal stages on or before March 1, 2010,
and 2011. Mr. Abbott is also an officer of the Company.

A description of the mining properties leased by the Company is
as follows:

NT Green Property is located in central Lander County, Nevada
about 40 miles southwest of the town of Battle Mountain. The property is within
the Battle Mountain/Eureka (Cortez) Trend at the northern end of the Toiyabe
Range.

Jack Creek Property is located in the northern Independence
Range about 50 miles north of Elko, Elko County, Nevada. It is comprised of 247
lode mining claims (nearly 5,000 acres) adjacent to Gateway Gold Corp.'s (TSX
Venture:GTQ) Big Springs and Dorsey Creek Properties.

The Illipah gold prospect is situated in eastern Nevada at the
southern extension of the Carlin Trend (T 18N, R 58E). The property consists of
one hundred ninety one unpatented federal Bureau of Land Management lode mining
claims, approximately 3,820 acres.

NOTE 5  ACCRUED LIABILITY

Pursuant to the terms of the Companys 2006 private offering,
it was required file a registration statement to register the shares issued in
the offering. The registration statement has not been filed and pursuant to the
terms of the offering, the Company is subject to penalties which accrue until
the shares are registered. The Company and the investors entered into a
settlement agreement in March 2008, whereby the investors waived all penalty
assessment in consideration for the receiving 2,272,500 shares of the Companys
common stock. The amount of penalty accrued and charge to operations in 2007
were capped at $249,975 which equals the fair value of the shares issued on the
settlement date. The 2,272,500 shares were issued on April 1, 2008.

NOTE 6  NOTES PAYABLE

On July 1, 2005, the Company borrowed $100,000 from Gatinara
Holdings, Inc., an unrelated third party. The loan is evidenced by an unsecured
promissory note. The note accrues interest at 8% per annum and matured on
December 31, 2006. Accrued interest related to this note as of December 31, 2007
amounted to $20,011. The principal and accrued interest was not paid as of
December 31, 2006 and is now in default.

In May 2007, the Company borrowed $12,000 from an unrelated
third party. The loan is non-interest bearing, unsecured and due on demand.

During 2007, the Company borrowed a total of $730,000 from Mr.
Carl Pescio. The loans are non-interest bearing and due on demand.

NOTE 7  CONVERTIBLE DEBT

From August 9, 2005 to October 5, 2005, the Company borrowed a
total of $330,978 from Greenshoe Investment, Inc., an unrelated third party. The
loans are evidenced by unsecured promissory notes. The notes accrue interest at
8% per annum and mature on December 31, 2007. Accrued interest related to these
notes as of December 31, 2007 amounted to $61,632. Principal and accrue interest
are convertible into common shares of the Companys common stock at a conversion
price of $.40 per share. See Note 12, Subsequent Events.

During the year ended December 31, 2006, the Company borrowed a
total of $649,838 from Greenshoe Investment, Inc. The loans are evidenced by
unsecured promissory notes. The notes accrue interest at 8% per annum and mature
on December 31, 2007. Accrued interest related to these notes as of December 31,

---

F-14

2007 amounted to $98,835. Principal and accrued interest are
convertible into common shares of the Companys common stock at a conversion
price of $.40 per share. See Note 12, Subsequent Events.

During the year ended December 31, 2007, the Company borrowed a
total of $50,000 from Greenshoe Investment, Inc. The loans are evidenced by
unsecured promissory notes. The notes accrue interest at 8% per annum and mature
on the anniversary date of the two loans. Accrued interest related to these
notes as of December 31, 2007 amounted to $663. Principal and accrued interest
are convertible into common shares of the Companys common stock at a conversion
price of $..05 per share.

As the conversion price is less then the trading price of the
shares on the loan date, the Company recognized beneficial conversion features
on each loan totaling $45,000. The $45,000 is an offset to the amount borrowed
and is being charged to interest over the term of the debt. For 2007, the
Company charged $7,246 to interest expense. The remaining balance of $37,754
will be fully charged to operations in 2008, when the loans mature.

NOTE 8  STOCKHOLDERS (DEFICIT)

Common Stock

On April 19, 2004, the Company authorized a 50-for-1 stock
split. On August 18, 2004, the Company authorized a 6.82 -for-1 stock split. On
May 16, 2005, the Company authorized a 1.20 -for-1 stock split. In addition, the
Company increased it authorized shares to 100,000,000. The accompanying
financial statements have been retroactively restated to present the effect of
these three stock splits.

On April 15, 2005, the Company's officers and directors agreed
to redeem an aggregate of 27,172,800 of their shares for $7,906 or $.0002909 per
share. The shares include 13,586,400 shares from Dr. Abbott, and 6,793,200
shares from each of Messrs. Pescio and Keith. Dr. Abbott's shares were redeemed
for $3,954, and Messrs. Pescio and Keith each received $1,976 for their shares.
These amounts are the equivalent to the pre-split prices they paid for their
shares when they joined the Company in March 2004. The $7,906 was paid during
the three months ended September 30, 2005.

In April 15, 2005, the holders of the notes payable converted
the principal amount of the notes totaling $1,025,000 and accrued interest of
$79,271 into 1,325,126 shares of the Company's common stock.

In the fourth quarter of 2005, the Company sold 625,000 shares
of common stock to an investor for total cash proceeds of $500,000. In
connection with this transaction, the Company also issued to this investor a
warrant to purchase 625,000 shares of common stock for $0.85 per shares. As of
December 31, 2005, the Company received $499,582. The remaining $418 has been
charged to equity and included in subscription receivable.

In the second quarter of 2006, the Companys former management
exercised some of their options to purchase a total of 24,800 shares of the
Companys common stock at a price of $.15 per share.

In the third quarter of 2006, the Company sold 1,145,000 units
through a private Reg S offering for $343,500. Each unit consisted of one share
of the Companys common stock and one warrant to purchase one share of the
Companys common stock at $.60 per share. The warrant expires three years from
date of issuance. The warrants and underlying common shares are anti-dilutive.

In the fourth quarter of 2006, the Company issued 100,000
shares of its common stock in connection with the purchase of its Illipah mining
claims. The shares were valued at $33,000 which represents the shares market
value on date of issuance. The $33,000 was capitalized and included in the costs
mining claims. In August 2007, the Company issued 200,000 shares of its common
stock relating to the original Illipah lease. The shares were valued at
$54,000.

Options and Warrants

---

F-15

| | 1) | In March 2004, the Company issued 60,000 options to
      former employees of the Company. In June 2006, former management exercised
      some of their options to purchase a total of 24,800 shares of the
      Companys common stock for $3,720.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | 2) | In accordance with a consulting agreement with Access
      Capital Management Corp., the Company issued Access Capital, 25,000
      options in September 2005 to purchase shares of the Companys common stock
      for $0.75 per shares. In December 2005, the Company extended the term of
      the agreement and granted Access an additional 125,000 options to purchase
      shares of the Companys common stock at a price of $0.75 per shares. The
      150,000 options granted expire on September 28, 2010 unless Access Capital
      no longer provides services for the Company whereby the options expire one
      year from the date of termination.                                                                                                                                                                                                                                                                           
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | 3) | As discussed above, in connection with the issuance of
      the 625,000 shares of the Companys common stock, the Company granted
      625,000 warrants to purchase shares of the Companys common stock at $.85
      per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | 4) | In connection with the Companys July 2006 private
      offering, the Company issued 1,145,000 warrants to purchase shares of the
      Companys common stock at $.60 per share. The warrants expire three years
      from the date of issuance.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | The warrant holders have the right to convert the
      warrants granted into shares of the Companys common stock for no further
      consideration based upon a formula indicated in the warrant
    agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | 5) | Also in July 2006, the Company received $1,500,000 in
      exchange for the issuance of 5,000,000 warrants which can be converted
      into 5,000,000 shares of the Companys common stock at any time by the
      warrant holder for no further consideration through July 14, 2016 on which
      date the Company will issue the 5,000,000 shares. The warrant holder was
      also granted an additional 5,000,000 warrants to purchase shares of the
      Companys common stock at a price of $.60 per share. These additional
      warrants expire three years from the date of issuance.                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | The warrant holders have the right to convert the
      additional warrants granted into shares of the Companys common stock for
      no further consideration based upon a formula indicated in the warrant
      agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | In connection with the July 2006 common stock offering
      and granting of warrants, the Company agreed to register all common shares
      relating to the offering with the Securities and Exchange Commission
      within 180 days of receiving the proceeds from the offering. Under the
      terms of the Registration Rights Agreement, the investors are entitled to
      liquidating damages in an amount equal to 1% of the aggregate amount
      invested for each 30- day period or pro rata for any portion thereof, in
      which a registration statement was not declared effective by the
      Securities Exchange Commission. In March 2008, the Company entered into a
      settlement agreement whereby in exchange for issuing 2,272,500 shares of
      the Companys common stock, the Company is relieved of its obligations
      under the liquidated damages provision of the Registration Rights
      Agreement.

The following table summarizes the options and warrants
outstanding at December 31, 2007:

---

F-16

Options/
    
    
    Weighted AverageWarrants
    
    
    ExerciseOutstanding
    
    
    PriceBalance - December 31, 2004
    
    60,000
    
    $
    .1500Granted
    
    775,000
    
    $
    .8306Exercised
    
    -Forfeited
    
    -Balance - December 31, 2005
    
    835,000
    
    $
    .7817Granted
    
    11,145,000
    
    $
    .4654Exercised
    
    (24,800
    )
    $
    (.1500
    )Forfeited
    
    -Balance  December 31, 2006
    
    11,955,200
    
    $
    .4886Granted
    
    -
    
    
    -Exercised
    
    -
    
    
    -Forfeited
    
    -
    
    
    -Balance  December 31, 2007
    
    11,955,200
    
    $
    .4886


All of the above options and warrants are exercisable at
December 31, 2007.

NOTE 9  INCOME TAXES

Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for financial
statement purposes and the amounts used for income tax purposes. Significant
components of the Company's deferred tax liabilities and assets as of December
31, 2007 are as follows:

Deferred tax assets:Net operating
      loss
    $
    1,851,000Less valuation allowance
    
    (1,851,000
    )$
    -


At December 31, 2007, the Company had federal net operating
loss ("NOL") carryforwards of approximately $5,444,000. Federal NOLs could, if
unused, begin to expire in 2024. The increase in deferred tax assets in 2007 of
$1,851,000related to the Companys 2007 net operating loss which was reduced to
$0 due to the Companys 2007 valuation allowance. Utilization of the net
operating loss and tax credit carryforwards is subject to significant
limitations imposed by various income tax codes and regulations.

NOTE 10  RELATED PARTY TRANSACTIONS

During the year ended December 31, 2007 and 2006, the Company
  had the following transactions with related parties:

As discussed in Note 4, the Company entered into agreements
  with a company owned by Mr. Carl Pescio, a Director of the Company, to acquire
  mining claims. During the year ended December 31, 2007, the Company paid Mr.
  Pescio $150,000 related to these agreements.

As further discussed in Note 4, the Company entered into an
agreement with Messrs. Abbott and Keith to acquire certain mining properties.
During the year ended December 31, 2007, the Company paid Mr. Abbott $11,700 and
Mr. Keith $18,300 related to this agreement.

---

F-17

During the year ended December 31, 2007 and 2006, the Company
  incurred consulting fees for services provided by Mr. Earl Abbott and related
  reimbursed costs totaling $100,504 and $118,550, respectively. Of the $100,504
  incurred in 2007, $61,819 related to mining exploration and $38,685, related
  to general administrative activities. Of the $118,550 incurred in 2006, $67,200
  related to mining exploration and $51,350 related to general administrative
  activities.

During the year ended December 31, 2006, the Company incurred
  consulting fees of $50,000 to Mr. George Drazenovic, its Chief Financial Officer.
  Mr. Drazenovic was not affiliated with the Company until 2006.

During the year ended December 31, 2007, Mr. Carl Pescio
advanced $730,000 which is unsecured, non-interest bearing and due on
demand.

NOTE 11  PRIVATE STOCK OFFERING

The Company is conducting a private placement offering of
1,250,000 units of its securities at the price per unit of $.20. Each unit
consists of one share of the Companys stock and a warrant to purchase one-half
of one share of the Companys common stock at a price of $.30 per share.
Warrants expire 2 years after date of grant. The Company is deferring all direct
costs associated with the offering. Costs will either be charged against the
proceeds received through the offering, if the offering is successful, or
charged to operations, if the offering is unsuccessful. As of December 31, 2007,
deferred offering costs amount to $2,500. No units have been sold as of December
31, 2007.

NOTE 12 - SUBSEQUENT EVENTS

On March 28, 2008, the Company issued 3,201,663 shares of its
common stock in consideration for the cancellation of $1,280,641 of
indebtedness.

On April 7, 2008, the Company issued 2,272,500 shares of its
  common stock in consideration for the release of the accruing damages relating
  to its failure to register certain shares pursuant to the terms of a previous
  private stock offering. See Note 4.

---

- 22 -

|Item 8. | Changes In and Disagreements With
      Accountants on Accounting and Financial Disclosure.
|------- | -------------------------------------------------------------------------------------------

None.

|Item 8A. | Disclosure Controls and Procedures
|-------- | ----------------------------------

Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to
ensure that we are able to collect the information we are required to disclose
in the reports we file with the Securities and Exchange Commission (SEC), and to
process, summarize and disclose this information within the time periods
specified in the rules of the SEC. As required by Rule 13a-15 under the
Securities Exchange Act of 1934 (the Exchange Act), we carried out an
evaluation of the effectiveness of the design and operation of our disclosure
controls and procedures as of December 31, 2007, being the date of our most
recently completed fiscal year. Based on their evaluation of our disclosure
controls and procedures, our principal executive officer and our principal
financial officer believe that these controls and procedures are effective to
ensure that we are able to collect, process and disclose the information we are
required to disclose in the reports we file with the SEC within the required
time periods.

Management's Annual Report on Internal Control Over
Financial Reporting

Our management is responsible for establishing and maintaining
adequate internal control over financial reporting (as defined in Rules
13a-15(f) and 15d-5(f) under the Exchange Act). Our management assessed the
effectiveness of our internal control over financial reporting as of December
31, 2007. In making this assessment, our management used the criteria set forth
by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO")
in Internal Control-Integrated Framework. Our management has concluded that, as
of December 31, 2007, our internal control over financial reporting is effective
based on these criteria. This annual report does not include an attestation
report of our registered public accounting firm regarding internal control over
financial reporting. Management's report was not subject to attestation by our
independent registered public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission that permit our company to provide only
management's report in this annual report.

Our management, including our Chief Executive Officer and Chief
Financial Officer, does not expect that our internal control over financial
reporting will prevent all error and all fraud. A control system, no matter how
well conceived and operated, can provide only reasonable, not absolute,
assurance that the objectives of the control system are met. Further, the design
of a control system must reflect the fact that there are resource constraints,
and the benefits of controls must be considered relative to their costs. Because
of the inherent limitations in all control systems, no evaluation of controls
can provide absolute assurance that all control issues and instances of fraud,
if any, within our company have been detected. Our internal control over
financial reporting, however, are designed to provide reasonable assurance that
the objectives of internal control over financial reporting are met.

|Item 8B. | Other Information
|-------- | -----------------

None.

PART III

|Item 9. | Directors, Executive Officers, Promoters and
      Control Persons; Compliance with Section 16(a) of the Exchange
      Act.
|------- | ----------------------------------------------------------------------------------------------------------------------------

Directors and Executive Officers, Promoters and Control
Persons

All directors of our company hold office until the next annual
meeting of the stockholders or until their successors have been elected and
qualified. The officers of our company are appointed by our board of directors
and hold office until their death, resignation or removal from office. Our
directors, executive officers and significant employees, their ages, positions
held, and duration as such, are as follows:

---

- 23 -

NAME
    AGE
    POSITION
    DATE FIRST ELECTED OR
      APPOINTEDEarl W. Abbott
    65
    President, Chief Executive
      Officer,
    April 1, 2004Secretary, DirectorGeorge J. Drazenovic
    37
    Chief Financial Officer
    Appointed as CFO as of March
      28,2006; Elected as a director as
      ofJanuary 24, 2007Carl A. Pescio
    55
    Director
    April 1, 2004Larry D. Kornze
    60
    Director
    December 13, 2007Ernestine Chan
    36
    Director
    December 13, 2007


The following is a brief account of the education and business
experience of directors and executive officers during at least the past five
years, indicating their principal occupation during the period, and the name and
principal business of the organization by which they were employed.

Dr. Earl W. Abbott was appointed as our President, Chief
Executive Officer, Chief Financial Officer, Secretary, and Director in March
2004. He resigned as our Chief Financial Officer in March 2006 when Mr.
Drazenovic was appointed as Chief Financial Officer. Dr. Abbott is a senior
geologist and Qualified Person with 35 years of experience in mineral
exploration for large and small companies in the western United States, Alaska,
Mexico, China, Africa, and Costa Rica. From 2004 to 2006, Dr. Abbott has been
the President and remains a Director of Big Bar Gold Corp., a company reporting
on a Canadian exchange. From 2004 to present, Dr. Abbott has been President and
Director of AAA Energy Inc., a company reporting on a U.S. exchange. From 2007
to presen, Dr. Abbott has been a Director of Desert Gold Ventures, a company
reporting on a Canadian exchange; and from 1999 to present, Dr. Abbott has
served as the president of King Midas Resources Ltd., a private Canadian company
he founded, which has acquired U.S. and Mexican gold properties. From 1982 to
the present, Dr. Abbott has been self-employed as a geological consultant, in
which he manages metallic and industrial mineral projects and exploration
programs. From 1988 to 1997, Dr. Abbott was the Vice President and Director the
Trio Gold Corp., where he managed gold exploration activities in the U.S.,
Ghana, and Costa Rica. From 1983 to 1984, he served as a regional geologist for
U.S. Minerals Exploration Company, where he conducted a successful gold
exploration program in Nevada and Utah. From 1978 to 1982, he was a district
geologist for Energy Reserves Group, Inc., where he opened and managed the Reno
District exploration office and managed more than twenty projects, which
included geologic mapping, geochemical surveys, and more than 70,000 feet of
rotary drilling, along with conducting uranium exploration in Nevada, Wyoming,
South Dakota, and Montana. From 1975 to 1985, Dr. Abbott was a senior geologist
with Urangesellschaft USA, Inc., where he conceived, managed, and conducted
uranium exploration programs in remote terrains in Alaska; and from 1971 to
1975, Dr. Abbott was a project geologist for Continental Oil Company, where he
supervised uranium exploration rotary drilling programs in Wyoming.

Dr. Abbott is a member of the American Institute of
Professional Geologists and a past president of its Nevada section. He is also a
Certified Professional Geologist and a member of the Geological Society of
Nevada (and its past president). In addition, Dr. Abbott is a member of the
Society of Mining Engineers of American Institute of Mining, Metallurgical and
Petroleum; the Denver Region Exploration Geologists Society (and its past
president); and the Nevada Petroleum Society (and its past president). Dr.
Abbott earned his Ph.D. in Geology in 1972 and his Master of Arts in Geology in
1971 from Rice University, Houston, Texas. Dr. Abbott earned his Bachelor of
Arts degree in Geology in 1965 from San Jose State College, San Jose,
California. Except as otherwise stated, Dr. Abbott is not an officer or director
of any other reporting company.

Mr. George Drazenovic was appointed as our Chief
Financial Officer on March 28, 2006 and a director of our company on January 24,
2007. Since October 18, 2006 Mr. Drazenovic has served as the Chief Financial
Officer, Treasurer, Secretary and Director of Sun Cal Energy Inc. Since March
28, 2006 Mr. Drazeanovic has served as the Chief Financial Officer of Tornado
Gold International Corporation. Since, January 24, 2007 he has also served as a
director of Tornado Gold International Corporation. From 2001 to 2005, Mr.
Drazenovic was the Financial Manager, Engineering Services for BC Hydro. From
1995 to 2000, Mr. Drazenovic was the Manager  Accounting for Queensboro
Investments. Mr. Drazenovic earned his Bachelor of Arts in Economics from the
University of British Columbia in 1991, a Diploma in Financial Management from
the British Columbia Institute of Technology in 1993, and a Masters of Business
Administration in Finance from the University of Notre Dame in 2001. He also

---

- 24 -

obtained licensing as a Certified General Accountant in 1997
and is a CFA Charter holder (Chartered Financial Analyst) since 2001. Mr.
Drazenovic is a member of the Certified General Accountants of British Columbia
and the Vancouver Society of Financial Analysts. From 2006 to January 2008, Mr.
Drazenovic served as a director of Oramed Pharmaceuticals Inc., a company with
its common stock quoted on the OTC Bulletin Board. Mr. George Drazenovic is also
currently a director and CFO of Sun Cal Energy Inc., a company with its common
stock quoted on the OTC Bulletin Board.

Mr. Carl A. Pescio is a director of ours. Mr. Pescio is
a geologist offering more than 30 years of experience in the mining resource
sector. In 1974, Mr. Pescio graduated from the University of Nevada with a
Bachelor of Science in Geology. After graduating, Mr. Pescio joined Kennecott
Copper Corp. as a geologist. Since 1975, Mr. Pescio has worked for numerous
other natural resource companies in various positions, including: Geologist,
Chief Geologist, Geological Engineer, Mine Manager, and Vice President of
Exploration. Mr. Pescios tenure with Alta Gold between 1987 and 1991 as
Vice-President of Mining and Exploration led to his interest and focus on
exploration for precious metal deposits in the Nevada gold trends. Since 1991,
he has focused his efforts on acquiring properties with potential for deposits
large enough to interest the major mining companies in the area. In 2007, Mr.
Pescio participated in forming and is a Director of Allied Nevada Gold Corp., a
company reporting on Canadian and U.S. exchanges Except as otherwise stated, Mr.
Pescio is not an officer or director of any other reporting company.

Ms. Ernestine Chan was appointed as a Director of the
company on December 13, 2007. Ms. Chan has over 13 years' of progressive
experience in the Banking/ Finance industry in both Vancouver and Hong Kong in
the areas of Corporate Finance, Treasury, Equity Research, Investment/ Fund
Management, Financial Modeling, Credit Analysis, Valuation and Project
Management. Her breadth of experience was gained from various settings from the
big banks to small brokerage/ private equities/ Venture Capital companies.
Ernestine is active in her profession and volunteers on boards such as the CFA
Vancouver, Treasury Management Association of Canada, HK-Canada Business
Association, the SFU and UBC Finance Clubs and political parties. She maintains
an extensive network of professionals and executives in the industry. In
addition, she teaches Corporate Finance & Investment classes at local
institutions and CFA exam prep courses. Ernestine earned her Bachelor of
Commerce (Finance & Urban Land Economics) from UBC and her MBA from the
Schulich School of Business at York University. She holds the CFA (Chartered
Financial Analyst) and CMA (Certified Management Accountant) designations.

Committees of the Board

Audit Committee

We do not have an audit committee, our entire board of
directors performs the functions of an audit committee. The current size of our
board of directors does not facilitate the establishment of a separate
committee. The determination of independence of directors has been made using
the definition of independent director contained under Rule 4200(a)(15) of the
Rules of National Association of Securities Dealers.

Audit Committee Financial Expert

Our board of directors has determined that it does not have a
member of the audit committee that qualifies as an audit committee financial
expert as defined in Item 401(e) of Regulation S-B.

We believe that our entire board of directors is capable of
analyzing and evaluating financial statements that present a breadth and level
of complexity of accounting issues that are generally comparable to the breadth
and complexity of the issues reasonably expected to be raised by our company. In
addition, we believe that retaining an independent director who would qualify as
an audit committee financial expert would be overly costly and burdensome and
is not warranted in our circumstances given the early stages of our development
and the fact that we have not generated revenues to date.

Nominating Committee

We do not have a nominating committee, our entire board of
director performs the functions of a nominating committee and oversees the
process by which individuals may be nominated to our board of directors.

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- 25 -

There has not been any defined policy or procedure requirements
for stockholders to submit recommendations or nomination for directors. Our
board of directors does not believe that a defined policy with regard to the
consideration of candidates recommended by stockholders is necessary at this
time because we believe that, given the early stages of our development, a
specific nominating policy would be premature and of little assistance until our
business operations are at a more advanced level. There are no specific, minimum
qualifications that our board of directors believes must be met by a candidate
recommended by our board of directors. The process of identifying and evaluating
nominees for director typically begins with our board of directors soliciting
professional firms with whom we have an existing business relationship, such as
law firms, accounting firms or financial advisory firms, for suitable candidates
to serve as directors. It is followed by our board of directors review of the
candidates resumes and interview of candidates. Based on the information
gathered, our board of directors then makes a decision on whether to recommend
the candidates as nominees for director. We do not pay any fee to any third
party or parties to identify or evaluate or assist in identifying or evaluating
potential nominee.

Compensation Committee

We do not have a compensation committee.

Family Relationships

There are no family relationships between any director or
executive officer.

Involvement in Certain Legal Proceedings

Our sole director, executive officers, promoters or control
persons have not been involved in any of the following events during the past
five years:

1. any bankruptcy petition filed by or
against any business of which such person was a general partner or executive
officer either at the time of the bankruptcy or within two years prior to that
time;

2. any conviction in a criminal
proceeding or being subject to a pending criminal proceeding (excluding traffic
violations and other minor offences);

3. being subject to any order,
judgment, or decree, not subsequently reversed, suspended or vacated, of any
court of competent jurisdiction, permanently or temporarily enjoining, barring,
suspending or otherwise limiting his involvement in any type of business,
securities or banking activities; or

4. being found by a court of competent
jurisdiction (in a civil action), the Commission or the Commodity Futures
Trading Commission to have violated a federal or state securities or commodities
law, and the judgment has not been reversed, suspended, or vacated.

Code of Ethics

We have not adopted a code of ethics that applies to our
principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions. We are in the
process of preparing and adopting a code of ethics.

Section 16(a) Beneficial Ownership Compliance

Section 16(a) of the Securities Exchange Act requires our
executive officers and directors, and persons who own more than 10% of our
common stock, to file reports regarding ownership of, and transactions in, our
securities with the Securities and Exchange Commission and to provide us with
copies of those filings. Based solely on our review of the copies of such forms
received by us, or written representations from certain reporting persons, we
believe that during fiscal year ended December 31, 2006, all filing requirements
applicable to its officers, directors and greater than 10% percent beneficial
owners were complied with.

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- 26 -

|Item 10. | Executive Compensation.
|-------- | -----------------------

The particulars of compensation paid to the following
persons:

- our principal executive officer;
- each of our two most highly compensated executive officers who were serving
  as executive officers at the end of the year ended December 31, 2007; and
- up to two additional individuals for whom disclosure would have been
  provided under (b) but for the fact that the individual was not serving as our
  executive officer at the end of the most recently completed financial year,
  who we will collectively refer to as the named executive officers, of our
  years ended December 31, 2007, 2006 and 2005, are set out in the following
  summary compensation table:

SUMMARY COMPENSATION
      TABLEName and principal position
    Year
    Salary ($)
    Bonus ($)
    Stock Awards ($)
    Option Awards ($)
    Non-Equity Incentive Plan
      Compensation ($)
    Nonqualified Deferred
      CompensationEarnings ($)
    All Other
      Compensation($)
    Total ($)Earl Abbott, President (CEO),
      Secretary, & Treasury
    2007 2006 2005
    Nil Nil Nil
    Nil Nil Nil
    Nil Nil Nil
    Nil Nil Nil
    Nil Nil Nil
    Nil Nil Nil
    100,504 (1)188,584(2)89,950(3)
    100,504 188,584 89,950George Drazenovic, CFO
    2007 2006 2005
    Nil Nil Nil
    Nil Nil Nil
    Nil Nil Nil
    Nil Nil Nil
    Nil Nil Nil
    Nil Nil Nil
    Nil (4)50,000
      (4)Nil
    Nil 50,000 Nil


(1)Dr. Abbotts 2007 compensation amounted to
$100,504 of which $53,344 was still due him as of December 31, 2007. Of the
$100,504, $61,819 related to mining exploration and $38,865 related to
administrative services.

(2)Dr. Abbott received a total of $118,550 for
consulting services during the year ended December 31, 2006, of which $67,200
related to mining exploration and the remaining $51,350 related to general
administrative services. In addition, during 2006, Dr. Abbott was reimbursed
$70,034, of which $39,879 related to exploration and $30,155 for travel and
other administrative expenses.

(3)Dr. Abbott received a total of $89,950 for
consulting services during the year ended December 31, 2005, of which $61,775
related to mining exploration and the remaining $21,875 related to general
administrative services. In addition, during 2005, Dr. Abbott was reimbursed
$25,609 for travel and other company-related expenses.

(4)During the year ended December 31, 2006, the
Company incurred consulting fees to Mr. George Drazenovic, its Chief Financial
Officer, $50,000. Of the $50,000, $15,000 was still due Mr. Drazenovich as of
December 31, 2007. Mr. Drazenovic was not affiliated with the Company until
2006. For the year ended December 31, 2007, Mr. George Drazenovic did not charge
the company consulting services.

Compensation of Directors

We reimburse our directors for expenses incurred in connection
with attending board meetings. We have not paid any director's fees or other
cash compensation for services rendered as a director since our inception to
December 31, 2007.

We have no formal plan for compensating our directors for their
service in their capacity as directors, although such directors are expected in
the future to receive stock options to purchase common shares as awarded by our
board of directors or (as to future stock options) a compensation committee
which may be established. Directors are entitled to reimbursement for reasonable
travel and other out-of-pocket expenses incurred in connection with attendance
at meetings of our board of directors. Our board of directors may award special
remuneration to any director undertaking any special services on our behalf
other than services ordinarily required of a director. No director

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- 27 -

received and/or accrued any compensation for their services as
a director, including committee participation and/or special assignments.

Long-Term Incentive Plans

There are no arrangements or plans in which we provide pension,
retirement or similar benefits for directors or executive officers, except that
our directors and executive officers may receive stock options at the discretion
of our board of directors. We do not have any material bonus or profit sharing
plans pursuant to which cash or non-cash compensation is or may be paid to our
directors or executive officers, except that stock options may be granted at the
discretion of our board of directors.

We have no plans or arrangements in respect of remuneration
received or that may be received by our executive officers to compensate such
officers in the event of termination of employment (as a result of resignation,
retirement, change of control) or a change of responsibilities following a
change of control, where the value of such compensation exceeds $60,000 per
executive officer.

|Item 11. | Security Ownership of Certain Beneficial
      Owners and Management.
|-------- | ---------------------------------------------------------------------

The following table sets forth, as of April 10, 2008, certain
information with respect to the beneficial ownership of our common stock by each
stockholder known by us to be the beneficial owner of more than 5% of our common
stock and by each of our current directors and executive officers. Each person
has sole voting and investment power with respect to the shares of common stock,
except as otherwise indicated. Beneficial ownership consists of a direct
interest in the shares of common stock, except as otherwise indicated.

Title of Class
    Name and Address of Beneficial Owner
    Amount and Nature of Beneficial
      Ownership
    Percentage of
      Class(1)(2)Common
    Earl W. Abbott 8600 Technology Way, Suite
      118, Reno, Nevada, 89521
    3,600,000
    10.06%Common
    Carl Pescio 8600 Technology
      Way, Suite 118, Reno, Nevada, 89521
    1,500,000
    4.19%Common
    All Officers and Directors as a
      group
    5,100,000
    14.25%


|(1) | Regulation S-B promulgated under the Exchange Act,
      defines a beneficial owner of a security as any person who, directly or
      indirectly, through any contract, arrangement, understanding,
      relationship, or otherwise, has or shares: (i) voting power, which
      includes the power to vote, or to direct the voting of shares; and (ii)
      investment power, which includes the power to dispose or direct the
      disposition of shares. Certain shares may be deemed to be beneficially
      owned by more than one person (if, for example, persons share the power to
      vote or the power to dispose of the shares). In addition, shares are
      deemed to be beneficially owned by a person if the person has the right to
      acquire the shares (for example, upon exercise of an option) within 60
      days of the date as of which the information is provided. In computing the
      percentage ownership of any person, the amount of shares outstanding is
      deemed to include the amount of shares beneficially owned by such person
      (and only such person) by reason of these acquisition rights. As a result,
      the percentage of outstanding shares of any person as shown in this table
      does not necessarily reflect the persons actual ownership or voting power
      with respect to the number of shares of common stock actually outstanding
      on April 16, 2007.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|(2) | Calculated based upon our 35,785,689 issued and
      outstanding shares as of April 10, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

Changes in Control

We are unaware of any contract or other arrangement the
operation of which may at a subsequent date result in a change in control of our
company.

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- 28 -

|Item 12. | Certain Relationships and Related
      Transactions.
|-------- | -----------------------------------------------------

Except as disclosed herein, there have been no transactions or
proposed transactions in which the amount involved exceeds the lesser of
$120,000 or one percent of the average of our total assets at year-end for the
last three completed fiscal years in which any of our directors, executive
officers or beneficial holders of more than 5% of the outstanding shares of our
common stock, or any of their respective relatives, spouses, associates or
affiliates, has had or will have any direct or material indirect interest:

During the year ended December 31, 2007 and 2006, the Company
had the following transactions with related parties:

From 2004 to 2006, we entered into various agreements with a
company owned by Mr. Carl Pescio, a Director of the Company, to acquire mining
claims. During the year ended December 31, 2007, we paid Mr. Pescio $150,000
related to these agreements.

In 2005, we entered into an agreement with Messrs. Abbott and
Keith (a former director of our company) to acquire certain mining properties.
During the year ended December 31, 2007, we paid Mr. Abbott $11,700 and Mr.
Keith $18,300 related to this agreement.

During the year ended December 31, 2007 and 2006, we incurred
consulting fees for services provided by Mr. Earl Abbott and related reimbursed
costs totaling $100,258 and $118,550, respectively. Of the $100,258 incurred in
2007, $71,630 related to mining exploration and $28,628, related to general
administrative activities. Of the $118,550 incurred in 2006, $67,200 related to
mining exploration and $51,350 related to general administrative activities.

During the year ended December 31, 2006, we incurred consulting
fees of $10,000 to Mr. George Drazenovic, our Chief Financial Officer. Mr.
Drazenovic was not affiliated with our company until 2006.

During the year ended December 31, 2007, Mr. Carl Pescio
advanced $730,000 which is unsecured, non-interest bearing and due on
demand.

|Item 13. | Exhibits
|-------- | --------

Exhibits required by Item 601 of Regulation S-B

|Exhibit | Description of Exhibit                                                                                                                                                                                                                                 
|------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3(i).1  | Articles of Incorporation filed with the Nevada Secretary
      of State on October 8, 2001 (Incorporated by reference from our
      Registration Statement on Form SB-2, filed on September 11, 2002, as
      amended (Registration No. 333-99443)).
|        |                                                                                                                                                                                                                                                        
|3(i).2  | Certificate of Amendment to Articles of Incorporation
      filed with the Nevada Secretary of State on July 7, 2004. (Incorporated by
      reference to Exhibit 3.1.1 of our Current Report on Form 8-K filed on July
      13, 2004).               
|        |                                                                                                                                                                                                                                                        
|3(i).3  | Certificate of Amendment to Articles of Incorporation
      filed with the Nevada Secretary of State on August 25, 2004. (Incorporated
      by reference to Exhibit 3.1 of our Current Report on Form 8-K filed on
      August 31, 2004).            
|        |                                                                                                                                                                                                                                                        
|3(ii).1 | Bylaws (Incorporated by reference from our Registration
      Statement on Form SB-2, filed on September 11, 2002, as amended
      (Registration No. 333-99443)).                                                                                     
|        |                                                                                                                                                                                                                                                        
|4.1     | 2005 Stock Option Plan. (Incorporated by reference to
      Exhibit 4.1 of our Amended Annual Report for 2005 filed on September 1,
      2005).                                                                                                       
|        |                                                                                                                                                                                                                                                        
|10.1    | Plan of Reorganization and Acquisition, dated May 10,
      2002 (Incorporated by reference from our Registration Statement on Form
      SB-2, filed on September 11, 2002, as amended (Registration No.
      333-99443)).                           

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- 29 -

|10.2  | Consulting Agreement
        with Carl Pescio. (Incorporated by reference to Exhibit 10.12 of our Amended
        Annual Report for 2004 filed on September 1, 2005).                                                                                                                                                                        
|----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                                                                                                                                                                                                              
|10.3  | Consulting Agreement
        with Earl Abbott. (Incorporated by reference to Exhibit 10.13 of our Amended
        Annual Report for 2004 filed on September 1, 2005).                                                                                                                                                                        
|      |                                                                                                                                                                                                                                                                                                                                              
|10.4  | Mining Lease
        and Option to Purchase Agreement - NT Green. (Incorporated by reference
        to Exhibit 10.16 of our Amended Annual Report for 2004 filed on September
        1, 2005).                                                                                                                                             
|      |                                                                                                                                                                                                                                                                                                                                              
|10.5  | Letter Agreement
        with Carl Pescio dated November 10, 2005. (Incorporated by reference to
        Exhibit 10.1 of our Current Report on Form 8-K filed on November 14, 2005).                                                                                                                                                         
|      |                                                                                                                                                                                                                                                                                                                                              
|10.6  | Form of Subscription
        Agreement. (Incorporated by reference to Exhibit 10.1 of our Current Report
        on Form 8-K filed on July 24, 2006).                                                                                                                                                                                        
|      |                                                                                                                                                                                                                                                                                                                                              
|10.7  | Form of Common
        Stock Purchase Warrant. (Incorporated by reference to Exhibit 10.2 of
        our Current Report on Form 8-K filed on July 24, 2006).                                                                                                                                                                                 
|      |                                                                                                                                                                                                                                                                                                                                              
|10.8  | Form of Registration
        Rights Agreement. (Incorporated by reference to Exhibit 10.3 of our Current
        Report on Form 8-K filed on July 24, 2006).                                                                                                                                                                                 
|      |                                                                                                                                                                                                                                                                                                                                              
|10.9  | Form of Special
        Warrant. (Incorporated by reference to Exhibit 10.4 of our Current Report
        on Form 8-K filed on July 24, 2006).                                                                                                                                                                                               
|      |                                                                                                                                                                                                                                                                                                                                              
|10.10 | Exploration License
        and Option to Lease Agreement, effective as of October 1, 2005, including,
        as Exhibit B thereto, Mining Lease and Option to Purchase Agreement, entered
        on or about April 1, 2006. (Incorporated by reference to Exhibit 10.1
        of our Current Report on Form 8-K filed on August 7, 2006).
|      |                                                                                                                                                                                                                                                                                                                                              
|10.11 | Option and Joint
        Venture Agreement, made as of May 1, 2006. (Incorporated by reference
        to Exhibit 10.2 of our Current Report on Form 8-K filed on August 7, 2006).                                                                                                                                                           
|      |                                                                                                                                                                                                                                                                                                                                              
|10.12 | Form of Letter
        Agreement between the registrant and Golden Cycle Gold Corporation, entered
        on or about August 23, 2006. (Incorporated by reference to Exhibit 10.1
        of our Current Report on Form 8- K filed on August 29, 2006).                                                                                     
|      |                                                                                                                                                                                                                                                                                                                                              
|10.13 | Joint Venture
        Agreement between the registrant and Allied Nevada Gold Corporation made
        as of September 24, 2007 (Incorporated by reference to Exhibit 10.19 of
        our Quarterly Report on Form 10- QSB filed on November 19, 2007).                                                                                     
|      |                                                                                                                                                                                                                                                                                                                                              
|10.14 | Exploration and
        Option to Enter Operating Agreement with Allied Nevada Gold Corp. effective
        January 1, 2008 (Incorporated by reference to Exhibit 10.1 of our Current
        Report on Form 8-K filed on March 31, 2008).                                                                                                   
|      |                                                                                                                                                                                                                                                                                                                                              
|31.1* | Section
        302 Certification under Sarbanes-Oxley Act of 2002 (Earl Abbott)                                                                                                                                                                                                                                                             
|      |                                                                                                                                                                                                                                                                                                                                              
|31.2* | Section
        302 Certification under Sarbanes-Oxley Act of 2002 (George Drazenovic)                                                                                                                                                                                                                                                       
|      |                                                                                                                                                                                                                                                                                                                                              
|32.1* | Section
        906 Certification under Sarbanes-Oxley Act of 2002 (Earl Abbott)                                                                                                                                                                                                                                                             
|      |                                                                                                                                                                                                                                                                                                                                              
|32.2* | Section
        906 Certification under Sarbanes-Oxley Act of 2002 (George Drazenovic)                                                                                                                                                                                                                                                       

* Filed herewith.

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- 30 -

|Item 14. | Principal Accountant Fees and Services
|-------- | --------------------------------------

Audit Fees

For the fiscal years ended December 31, 2007 and 2006, the
aggregate fees billed by Jonathan P. Reuben, CPA, for professional services
rendered for the audit of our annual consolidated financial statements included
in our annual report on Form 10-KSB were $15,000 and $15,000, respectively.

Audit Related Fees

For the fiscal years ended December 31, 2007 and 2006, the
aggregate fees billed for assurance and related services by Jonathan P. Reuben,
CPA, relating to the performance of the audit of our financial statements which
are not reported under the caption "Audit Fees" above, was $17,247 and $21,000,
respectively.

Tax Fees

For the fiscal years ended December 31, 2006 and 2005, the
aggregate fees billed by Jonathan P. Reuben, CPA, for other non-audit
professional services, other than those services listed above, totalled $Nil and
$Nil, respectively.

We do not use Jonathan P. Reuben, CPA, for financial
information system design and implementation. These services, which include
designing or implementing a system that aggregates source data underlying the
financial statements or generates information that is significant to our
financial statements, are provided internally or by other service providers. We
do not engage our auditor to provide compliance outsourcing services.

Effective May 6, 2003, the Securities and Exchange Commission
adopted rules that require that before Jonathan P. Reuben, CPA, is engaged by us
to render any auditing or permitted non-audit related service, the engagement
be:

- approved by our audit committee (which consists of our entire board of
  directors); or
- entered into pursuant to pre-approval policies and procedures established
  by the board of directors, provided the policies and procedures are detailed
  as to the particular service, the board of directors is informed of each
  service, and such policies and procedures do not include delegation of the
  board of directors' responsibilities to management.

The board of directors pre-approves all services provided by
our independent auditors. All of the above services and fees were reviewed and
approved by the board of directors either before or after the respective
services were rendered.

The board of directors has considered the nature and amount of
fees billed by Jonathan P. Reuben, CPA, and believes that the provision of
services for activities unrelated to the audit is compatible with maintaining
independence of Jonathan P. Reuben, CPA.

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- 31 -

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

TORNADO GOLD INTERNATIONAL CORPORATION

|By:                                                                                                                                                                                                                       | /s/
      Earl. Abbott      | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------- | 
|Earl W. Abbott                                                                                                                                                                                                            |                            
|CEO, President, Secretary, Treasurer                                                                                                                                                                                      |                            
|(Principal Executive Officer)                                                                                                                                                                                             |                            
|Date: April 14, 2008                                                                                                                                                                                                      |                            
|                                                                                                                                                                                                                          |                             | 
|By:                                                                                                                                                                                                                       | /s/
      George Drazenovic | 
|George Drazenovic                                                                                                                                                                                                         |                            
|Chief Financial Officer                                                                                                                                                                                                   |                            
|(Principal Financial Officer and Principal
      Accounting Officer)                                                                                                                                                      |                            
|Date: April 14, 2008                                                                                                                                                                                                      |                            
|                                                                                                                                                                                                                          |                             | 
|Pursuant to the requirements of the Securities Exchange
      Act of 1934, this report has been signed below by the following persons on
      behalf of the registrant and in the capacities and on the dates indicated.
|                                                                                                                                                                                                                          |                             | 
|By:                                                                                                                                                                                                                       | /s/
      Earl. Abbott      | 
|Earl W. Abbott                                                                                                                                                                                                            |                            
|CEO, President, Secretary, Treasurer                                                                                                                                                                                      |                            
|(Principal Executive Officer)                                                                                                                                                                                             |                            
|Date: April 14, 2008                                                                                                                                                                                                      |                            
|                                                                                                                                                                                                                          |                             | 
|By:                                                                                                                                                                                                                       | /s/
      George Drazenovic | 
|George Drazenovic                                                                                                                                                                                                         |                            
|Chief Financial Officer                                                                                                                                                                                                   |                            
|(Principal Financial Officer and Principal
      Accounting Officer)                                                                                                                                                      |                            
|Date: April 14, 2008                                                                                                                                                                                                      |                            

---